Japan’s Economy Exceeds Expectations with 0.5% Growth in Q2 and Significant Rise in Bank Lending
During the second quarter of the year, the Japanese economy delivered a stronger performance than anticipated, with gross domestic product (GDP) expanding by 0.5% compared to the previous quarter. This growth reflects an improvement in overall economic activity, after earlier estimates had pointed to a rate of no more than 0.3%, the same pace recorded in the first quarter.
On an annualized basis, the economy grew by 2.2% in the second quarter, surpassing projections of just 1%, underscoring the strength of the drivers supporting Japan’s recent economic momentum.
Capital expenditure rose by 0.6% compared to the previous quarter, though the figure fell short of expectations of 1.3% growth. External demand for Japanese exports increased by 0.3%, while household consumption rose by 0.4% on a quarterly basis, indicating a gradual improvement in domestic demand.
In the banking sector, recent data showed that bank lending expanded by 3.6% year-on-year in August, reaching 646 trillion yen (USD 4.36 trillion). This pace exceeded both the previous month’s rate and earlier forecasts. Excluding credit unions, lending rose 3.9% to 567.5 trillion yen, while credit union lending grew 1.3% for the third consecutive month, reaching 78.4 trillion yen.
Lending by foreign banks operating in Japan also recorded a notable increase of 15.6% in August to 5.6 trillion yen, following a strong 21.1% surge in the previous month. This reflects an expanding role of foreign banks in supporting economic activity in the country.
These indicators reveal that Japan’s economy exceeded expectations in the second quarter, supported by stronger exports and consumer spending, alongside continued growth in bank lending. Although capital expenditure rose at a slower pace than forecast, the overall performance points to a positive trend that enhances the prospects for sustained growth in the coming periods.
