Bankinter | GDP grew 1.0% (quarter-on-quarter) in Q2, beating consensus estimates and paving the way for further rate hikes by the Bank of Japan. Japan’s growth in Q2 has been a positive surprise, exceeding consensus forecasts of 0.4% growth. In addition, growth in the previous quarter has been revised upwards to 0.6% (quarter-on-quarter) from -0.2%.
Growth was led by business investment, which rose by 1.3% in the quarter, while consumption growth was more moderate (0.2%).
Bankinter analysis team’s view: Positive GDP surprise facilitates further rate hikes by the Bank of Japan.
The impact of tariffs and the trade war on the economy is not as severe as initially feared. The Bank of Japan has been normalising its monetary policy since the end of 2023 and rates currently stand at 0.50%. We expect rates to stand at 0.75% at the end of the year.
