Japan’s economy grew at an annualized rate of just 1.1% in Q2, roughly half the 2.0% pace economists had forecast, according to preliminary GDP data released by the Cabinet Office on August 17. Private consumption slipped 0.02%, marking the first decline in eight quarters, while capital spending fell 1.2%, well below the 0.4% increase expected. Analysts attributed the weakness to one-off factors including new education spending policies, tobacco price increases, and a pharmaceutical patent sale that distorted capex figures. Net exports were the sole bright spot, contributing 0.5 percentage points to GDP growth, driven by strong shipments of hybrid vehicles and semiconductor equipment, with oil supply disruptions via the Strait of Hormuz also playing a role.
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