The Tokyo Tower stands amid buildings at dusk in Tokyo, Japan.
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Japan’s economy expanded 0.3% in the second quarter of 2025 compared to the first three months of the year, beating forecasts despite tariff headwinds out of the United States.
This was compared to the revised 0.1% growth seen in the first quarter, and was higher than the 0.1% increase expected by economists polled by Reuters.
The GDP beat was mainly attributed to resilience in exports, which added 0.3 percentage points to GDP growth, compared to the 0.8% contraction in the first quarter of the year. Japan’s trade deficit narrowed from April to June compared to the first quarter, according to data from the country’s trade ministry.
On a year-over-year basis, Japan’s GDP expanded 1.2% in the second quarter, falling short of the first quarter’s 1.8% growth.
The country’s GDP grew 1% on an annualized basis, beating the 0.4% rise expected by the Reuters poll.
Following the data release, the benchmark Nikkei 225 was up 0.59%, while the yen strengthened 0.1% to trade at 147.6 against the dollar.
This comes as Japan struggled to cope with an uncertain trade environment in the second quarter, with the country only reaching a trade deal with the U.S. on July 23.
The deal sees Japan face a 15% blanket tariff on all exports to the U.S., including automobiles.
Throughout the second quarter, Japan was spared the 24% tariff that was announced on “Liberation Day,” but had to face 25% duties on its key automobile sector.
Auto exports to the U.S. are a cornerstone of Japan’s economy, making up 28.3% of all shipments in 2024, according to customs data.
After its July 31 meeting, the Bank of Japan upgraded its forecast for the country’s economy to grow 0.6% in its 2025 fiscal year, running from April 2025 to March 2026. This was higher than
However, the central bank also cautioned that trade and other policies globally would lead to a slowdown in overseas economies, as well as a decline in domestic corporate profits.
— This is breaking news, please check back for updates.
