Japan’s economy grew at an annual rate of 1.1% in the second quarter of 2026, despite a 1.2% decline in household spending and quarterly growth below analyst expectations. Exports rose 0.5%, driven by global demand for Japanese autos and semiconductors such as Toyota and Honda. The war in Iran has pushed energy costs higher, with Brent crude trading around $88 per barrel, up from $65 a year ago, creating additional pressures for resource-poor Japan. The weak yen has benefited major exporters but increased the cost of importing raw materials, fueling concerns about rising prices amid stagnant wage growth. PM Sanae Takaichi’s support ratings are gradually declining.
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