Japan Posts Third Straight Quarter of Growth Despite Capital Investment Decline

The Japanese economy experienced its third consecutive quarter of growth in April-June 2026, according to revised GDP figures released by the Cabinet Office. The seasonally adjusted real growth rate for this period came in at 0.4% quarter-on-quarter and 1.4% on an annualized basis. This marks a revision upward from preliminary estimates of 0.3% and 1.1%, respectively.

The revised figures were led by corporate capital investment, which narrowed its decline from 1.2% to 0.9% quarter-on-quarter. Personal consumption, accounting for roughly 60% of GDP, was nearly flat at 0.01% growth quarter-on-quarter, a slight upward revision from the preliminary -0.02%. Nominal GDP rose 1.3% quarter-on-quarter and 5.5% on an annualized basis.

The resilience of the economy is seen as supportive of the Bank of Japan's tightening path. Market attention is now focused on the central bank's monetary policy meeting scheduled for next week, with a near-certain 0.25 percentage point rate hike at the September meeting priced in by short-term money markets.