Japan Q2 GDP Annualized Growth 1.1%, Sharply Below 2% Forecast, Middle East Conflict Weighs on Capital Spending

Japan's Q2 GDP annualized growth was only 1.1%, far below the expected 2%, with capital spending unexpectedly falling 1.2% quarter-on-quarter and private consumption stagnating, as domestic demand fully stalled. Energy price hikes and supply chain disruptions from the US-Iran conflict were the biggest drags. Exports alone propped up the economy, partly aided by a weaker yen, while the slowdown complicates the Bank of Japan's rate hike path.