Affected by the uncertainty brought about by the Middle East conflict, corporate capital expenditure continued to be sluggish, and Japan's economic growth unexpectedly slowed in the three months ending June. According to a report released by Japan's Cabinet Office on Monday, the real GDP growth rate for the second quarter was 1.1%, lower than the 1.9% revised in the previous quarter, and lower than the 2% expected by economists, but it was still expanding for the third consecutive quarter. The decline in capital investment extended to 1.2%. The data released on Monday reflects the impact of the Middle East conflict on the Japanese economy. The conflict has boosted the prices of fuel and petroleum products, while disrupting parts of the supply chain. As a result of this unexpected slowdown, the Bank of Japan may face more complex policy communication challenges when weighing the timing of the next rate hike. This may also worry Prime Minister Sanae Takaichi. Since winning the general election by an overwhelming margin about six months ago, her approval rating has begun to decline as consumers become more and more dissatisfied with the continuing rise in the cost of living. People familiar with the matter said earlier that the Japanese government supports raising interest rates as soon as possible to ease inflationary pressure brought about by the weak yen.

Affected by the uncertainty brought about by the Middle East conflict, corporate capital expenditure continued to be sluggish, and Japan's economic growth unexpectedly slowed in the three months ending June. According to a report released by Japan's Cabinet Office on Monday, the real GDP growth rate for the second quarter was 1.1%, lower than the 1.9% revised in the previous quarter, and lower than the 2% expected by economists, but it continued to expand for the third consecutive quarter. The decline in capital investment extended to 1.2%. The data released on Monday reflects the impact of the Middle East conflict on the Japanese economy. The conflict has boosted the prices of fuel and petroleum products, while disrupting parts of the supply chain. As a result of this unexpected slowdown, the Bank of Japan may face more complex policy communication challenges when weighing the timing of the next rate hike. This may also worry Prime Minister Sanae Takaichi. Since winning the general election by an overwhelming margin about six months ago, her approval rating has begun to decline as consumers become more and more dissatisfied with the continuing rise in the cost of living. People familiar with the matter said earlier that the Japanese government supports raising interest rates as soon as possible to ease inflationary pressure brought about by the weak yen.