Japan Q1 GDP Revised Up to 2.2% Annualized on Strong Consumer Spending

Japan’s economy grew at a stronger pace in the fiscal first quarter than previously reported, the government said Monday, driven by healthier consumer spending and inventory accumulation.

The Cabinet Office revised seasonally adjusted real gross domestic product to a 2.2% annualized rate for the April–June quarter, up from a preliminary estimate of 1.0%. On a quarter-to-quarter basis, GDP rose 0.5%, larger than the earlier 0.3% estimate and slightly above analysts’ projections, according to RaboResearch. The result marked a fifth consecutive quarter of growth.

Private consumption, a key component of domestic demand, rose 0.4% in the quarter, revised up from an initial estimate of 0.2%. That improvement pushed domestic demand growth into positive territory at 0.2%, compared with a downwardly revised reading that had shown a 0.1% contraction in earlier data. The Cabinet Office said inventories also contributed more to growth than previously assessed.

The revision comes amid a backdrop of external and political risks. Washington’s decision to raise tariffs on Japanese imports has generated concern for the export-oriented economy; U.S. tariffs on some auto imports were increased to 15% from 2.5%, raising the potential for reduced overseas demand for Japanese vehicle shipments. Domestically, Prime Minister Shigeru Ishiba announced Sunday he would step down as head of the ruling party, triggering a party leadership contest to be held in the coming weeks.

Markets appeared to take the political development in stride on Monday, with the benchmark Nikkei stock average rising in morning trading. Market participants said Ishiba’s resignation had been anticipated and that investors viewed it as a step toward resolving party leadership uncertainty, though analysts cautioned that questions remain about possible coalition arrangements and the policy direction of any new leadership.

Economists said the revised figures underscore the continued role of household spending in sustaining Japan’s recovery even as export prospects face pressure from tariff measures. The annualized revision demonstrates how quarterly momentum—if sustained—translates into a markedly different yearly pace, and highlights the sensitivity of headline readings to upward or downward adjustments in consumption and inventories.

The Cabinet Office release follows an initial estimate issued last month and will feed into policy considerations as Japan’s government and businesses weigh fiscal and monetary settings amid uncertain global trade conditions. Yuri Kageyama of The Associated Press reported from Tokyo.