The Japanese government released data on May 14 showing the economy grew 2.1% annualized in the first quarter of 2026, the second consecutive quarter of expansion. The growth was driven by a recovery in exports and personal consumption, before the full impact of the conflict in the Middle East affects the economy.
According to data from the Cabinet Office, Japan's real GDP increased 0.5% quarter-on-quarter in the January-March period, following a 0.6% rise in the fourth quarter of 2025. Personal consumption, which accounts for more than half of the economy, grew 0.3% quarter-on-quarter, while exports rose 2.1%.
Economists said the positive results reflect a rebound from a mild recession earlier in 2025. However, officials also warned that the impact from geopolitical tensions in the Middle East, particularly higher energy prices, may not yet be fully reflected in the first-quarter data. Second-quarter growth is forecast to face headwinds from higher import costs and weaker global demand.
The Japanese government said it will continue to monitor economic developments closely and stands ready to implement necessary support measures to maintain the growth momentum.
