Japan Economic Comment "Limited downward revision to Q1 GDP" Kurihara

Research evidence excerpt

Japan Economic Comment "Limited downward revision to Q1 GDP" Kurihara

Global Research

8 June 2026ab

Japan Economic Comment Economics

JapanLimited downward revision to Q1 GDP

Go Kurihara

Associate Economist

Downward revision driven by capex, but far more limited than expected go.kurihara@ubs.com

+81-3-5293 3000

The Q1 GDP results have been released. Growth was revised down modestly from the

initial estimate of 2.1% to 1.8%, exceeding both the consensus forecast (1.4%) and our

projection (1.1%). The primary driver of the downward revision was business

investment, which was revised from +0.2% q/q to -0.5%q/q, subtracting 0.7ppt from

annualised GDP growth. However, the decline was far less severe than our expectation

(-1.0%). Although business investment declined on a quarterly basis, it basically

maintained steady, moderate growth of 1.3%y/y with growing intellectual property. In

addition to the limited scale of the capex revision, upward revisions in government

consumption (+0.2pp contribution to annualised GDP), private consumption (+0.1pp),

private residential investment (+0.1pp), and real exports (+0.1pp) collectively helped

keep the overall GDP revision relatively small.

Both household and corporate data remain firm in Q2

Incoming Q2 data suggest that both household and corporate sectors remain relatively

robust, indicating that Q2 GDP may not be as weak as previously feared. While the sharp

deterioration in household sentiment—driven by the surge in oil prices—was notable,

there is little evidence that it has materially constrained actual consumption behavior. On

the contrary, consumption has been strong: the April Consumption Activity Index rose

1.6%m/m, marking the strongest increase since September 2022. Despite some