Japan’s economy grew 0.5% quarter-on-quarter in Q1 2026, beating forecasts, yet the yen remains under pressure against the dollar.
The USD/JPY pair climbed to around 159.00 in Asian trading Tuesday, extending gains for a seventh straight session. The yen’s weakness persists despite Japan’s stronger-than-expected GDP growth of 0.5% quarter-on-quarter in Q1 2026, up from a revised 0.2% in Q4 2025 and above the 0.4% consensus.
Annualized growth reached 2.1%, the fastest pace in six quarters, surpassing the 1.7% forecast. However, rising oil prices due to Middle East tensions pose risks, threatening inflation and corporate profits in Japan’s import-dependent economy.
Geopolitical developments provided temporary relief as a planned US military strike on Iran was postponed, easing immediate concerns over energy supply disruptions.