Japan's Spring Growth Falls Short of Forecasts as the Yen Sits Near a 40 Year Low

Official data from Japan's Cabinet Office showed the economy grew 0.3 percent quarter on quarter in the April to June 2026 period, down from 0.5 percent growth in the prior quarter and below the 0.5 percent growth analysts had forecast, Al Jazeera reported. It was the third consecutive quarter of expansion, but annualized growth came in at 1.1 percent, well below the 1.67 percent annualized growth a survey of 37 economists by the Japan Center for Economic Research (JCER) had projected.

Private consumption was flat while capital expenditure fell 1.2 percent quarter on quarter (4.6 percent annualized), even as net exports contributed 0.5 percentage points to growth and domestic demand subtracted 0.2 percentage points. Norihiro Yamaguchi, lead Japan economist at Oxford Economics, said he expects growth to stay sluggish in the second half of 2026, partly because of rising energy costs stemming from the fallout of the United States-Israel war on Iran, given Japan imports nearly all of its crude oil.

Al Jazeera also reported that the Japanese yen hit a 40 year low against the dollar last month, and the Bank of Japan, which raised its policy rate to 1 percent in June, its highest in more than three decades, will hold its next policy meeting on September 17 and 18.