Japan's Q2 Growth Was Much Higher Than Thought
By wchung | 22 Mar, 2026

Japan’s economy wasn’t quite as weak in the second quarter as first thought but faces a murky outlook, the government said Friday as it unveiled a new $11 billion stimulus package.

Gross domestic product expanded at an annualized rate of 1.5 percent in April through June, an improvement on the meager 0.4 percent reported in last month’s preliminary report. The result translates to quarterly growth of 0.4 percent compared with 0.1 percent in initial estimates.

The difference stems in large part from higher capital spending by companies. Corporate investment expanded 1.5 percent, compared with 0.5 percent growth in the Cabinet Office’s preliminary figures.

Last month’s figures, which showed a barely growing economy, triggered widespread concern about the health of Japan’s export-led recovery. The latest numbers, which put Japan on par with U.S. growth rates, are better but not great. The result still represents a sharp drop from the 5 percent annualized growth recorded in the first quarter.

Friday’s report is unlikely to ease concerns about Japan’s outlook. It faces signs of slowing global growth and a stubbornly strong yen, which hit a fresh 15-year-high this week. A strong yen hurts the country’s vital exporters by reducing the value of repatriated profits and making their products less competitive overseas.

Shortly after the GDP figures, the government announced that Prime Minister Naoto Kan’s Cabinet has approved new stimulus measures worth 915 billion yen ($10.9 billion). The expected package includes steps to create 200,000 jobs and boost GDP by about 0.3 percent.

The government said it “will take decisive actions, including (market) intervention, when necessary” to stem the yen’s rise against other major currencies, according to Kyodo news agency. It also expressed hope that the central bank would work with the government to enact additional policy measures when necessary.

Hamstrung by massive debt, the government will not issue new bonds to fund the emergency measures. It will instead tap into a reserve fund in this year’s budget.

News of the package comes four days before a ruling party leadership election. Kan faces a fierce challenge from veteran lawmaker Ichiro Ozawa for presidency of the Democratic Party of Japan.

Because the Democrats control a majority in the lower house, whoever wins Tuesday will almost certainly become prime minister.

TOMOKO A. HOSAKA, Associated Press Writer TOKYO