The Japanese economy grew by 1% in the second quarter

• The Japanese economy grew by 1% in the second quarter of 2025.
• Capital investments increased by 1.3%, supporting economic growth.
• Analysts are analyzing the impact of U.S. tariffs on Japanese exports.

The Japanese economy grew by 1% year-on-year in the second quarter of 2025, according to government data released on August 15. This growth surpassed analysts' forecasts, which expected an increase of 0.4%.

The main factors contributing to the growth were steady export supplies and increased capital investments. In the second quarter, capital expenditures rose by 1.3% year-on-year, which also positively influenced the overall economic indicator.

Consumer spending, which constitutes a larger part of the economic output, increased by 0.2%, which corresponds to market forecasts. However, despite the positive indicators, economists warn of potential risks associated with global economic uncertainties, driven by U.S. tariffs.

Former President Donald Trump's demands for increased tariffs on Japanese imports did not impact exports in the short term, as Japanese automakers significantly reduced additional expenditures, lowering prices. However, in the future, it is expected that importers will begin passing these costs onto American consumers.

The increase in gross domestic product (GDP) by 0.3% compared to the previous quarter marks the fifth consecutive quarter of economic growth in Japan. However, despite this, the government has lowered its inflation growth forecast for this fiscal year to 0.7% due to expected reductions in capital expenditures as a result of new tariffs.

Tags: Economy