The economy of Japan performed much better than expected in the second quarter of 2025 – expanding 0.3% from the first three months of the year, outpacing forecasts despite the tariffs imposed by the US President Donald Trump’s administration.
This number is being compared to the 0.1% increase expected by economists polled by the Reuters agency. The Gross Domestic Product (GDP) beat is mainly attributed to resilience in exports, according to CNBC.
Exports added 0.3 percentage points to GDP expansion, compared to the 0.8% contraction noted in the first quarter of 2025. Japan’s trade deficit reduced in the second quarter compared to the first one, according to information from the trade ministry.
Japan comes out of uncertain trade circumstances unscathed?
On the announcement of the expansion of the economy, the benchmark Nikkei 225 rose 0.59% and the currency edged up 0.1% to trade at 147.6 against the US dollar. This comes as Japan managed to go through uncertain trade circumstances in the second quarter.
Japan and the US reached a trade agreement only on July 23. This deal causes Japan to face a 15% blanket tariff on all exports to the US, including the significant automobile industry. Throughout the second quarter, Japan had to face 25% duties on its key automobile sector.
The GDP rebound is definitely better than anticipated. But experts appear to remain cautious. Late last month, the Bank of Japan also upgraded its forecast for the economy to expand 0.6% in the 2025 fiscal year, compared to the 0.5% in the earlier forecast.
