Japan’s economy expanded 1.1% in annualized terms in the second quarter of 2025, missing market expectations of 2% growth. This figure represents a slowdown from the 2.1% recorded in the previous quarter. It marks the first full quarter impacted by the Iran war, which has pushed energy prices higher for businesses and households. Exports were the main driver of growth, though helped by a weak yen. The Bank of Japan raised its GDP growth forecast for fiscal year 2026 to 0.6% from 0.5%.
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