Japan’s economy advanced 1.0% on an annualized basis in Q2 2025, exceeding market expectations of 0.4% and accelerating from 0.6% in the prior quarter, flash data showed. This marked the fifth straight quarter of annual growth, underpinned by resilient private consumption amid government measures to ease inflationary pressures from rising food prices - especially rice - and higher energy costs. Capital spending also accelerated, extending its five-quarter growth streak on strong corporate investment in labor-saving technologies, digitalization, and supply chain diversification. Net trade also made a positive contribution, with exports rebounding sharply as the impact of recently imposed 15% blanket U.S. tariffs on Japanese goods—set to take full effect later this year—had yet to be felt. Economists caution that the tariff-related drag could become more pronounced in the coming quarters.