Japan revises Q2 GDP up to annualised 1.4% expansion

Japan's economy grew at an annualized 1.4% in the April-June quarter, surpassing the previously estimated 1.1%, according to revised data released by the Cabinet Office on Tuesday. The upward revision was primarily driven by businesses increasing their capital expenditures, which were less weak than initially projected. Economists had forecast a 1.6% growth rate, but the actual figure was in line with their median prediction.

Private consumption remained flat, aligning with the initial data, while real wages rose by 2.4% in July from a year earlier, marking the largest increase since May 2021 and the seventh consecutive month of gains. The Bank of Japan is widely expected to raise interest rates in September, with traders pricing in a 98% chance for a 25 basis point hike to 1.25% at the meeting.

The upward revision also reflects the impact of the Middle East conflict and the Bank of Japan's past rate hikes on the country's economic performance.