Japan Q1 2026 GDP Grows 2.1% Annualized, Beating Forecasts

Japan's Cabinet Office released its preliminary Q1 2026 GDP estimate, showing 0.5% quarter-on-quarter growth (annualized: +2.1%), outperforming the Reuters consensus of +1.7% annualized and marking the strongest quarterly growth since Q3 2024. Private consumption rose for the fifth consecutive quarter (+0.3%), and exports expanded 1.7% on recovering automotive shipments and strong machinery demand. Despite the headline beat, the Bank of Japan had cut its full-year FY2026 growth forecast to 0.5%, warning that higher crude oil prices from the Middle East conflict would weigh on corporate profits and household incomes. The yen traded near ¥158.95 per USD. The Nikkei 225 fell 0.64% on the day as markets priced in Iran-related headwinds for the remainder of 2026.