Japan's Economy Expands at Slower Pace Than Expected

Japan's economy expanded at a slower pace than expected in April-June, driven by weak private consumption and higher raw material costs. According to government data released on Monday, the annualised gross domestic product (GDP) growth rate came in at 1.1%, missing market estimates of 2.0%. The quarterly GDP increase was 0.3%, lower than the median estimate of a 0.5% rise.

Private consumption, which accounts for over half of Japan's economic output, remained flat in the second quarter, falling short of a forecasted 0.5% increase. Capital spending, another key driver of private demand, declined by 1.2%, versus market expectations of a 0.4% rise.

The Bank of Japan (BOJ) is closely monitoring consumption and wage trends to gauge the economy's strength and determine if additional rate hikes are necessary. Analysts warn that rising import costs and upstream price pressures could eventually affect consumers, posing a risk to spending later this year.