Japan's upward GDP revision contrasts with political uncertainty after Ishiba's resignation

[Japan economy and financial market growth concept, 3D rendering]
Kagenmi

Japan’s GDP expanded 0.5% q/q in Q2 2025, beating a flash estimate of 0.3% and picking up from an upwardly revised 0.1% in Q1, marking the fifth straight quarterly growth.

Japan’s economy grew by 2.2% on an annualized basis in Q2, 2025, exceeding the initial estimate of 1.0% and sharply accelerating from a downwardly revised 0.3% increase in Q1.

Economists warn that tariff headwinds could intensify in the coming quarters, while growing political uncertainty after Prime Minister Shigeru Ishiba’s resignation may complicate policymaking.

Separately, Japan’s service sector index rose to 46.7 in August 2025 from 45.2 in the previous month, marking the highest since January and the fourth straight monthly increase and beating market forecasts of 45.7.

Japan’s bank lending rose 3.6% in August 2025, accelerating from a 3.2% gain in July and exceeding market expectations for a 3.2% growth.

Japan’s current account surplus decreased to JPY 2,684.3 billion in July 2025 from JPY 3,319.7 billion in the same month a year earlier.

The Nikkei 225 Index [https://seekingalpha.com/symbol/NKY:IND#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] climbed 1.1% to above 43,500 while the broader Topix Index gained 0.7% to 3,127 on Monday, with Japanese shares edging closer to record highs. The Japanese yen [https://seekingalpha.com/symbol/USD:JPY#hasComeFromMpArticle=false#source=section%3Amain_content%7Cbutton%3Abody_link%7Cfirst_level_url%3Anews] weakened past 148 per dollar on Monday, reversing gains from the previous session, after Prime Minister Shigeru Ishiba announced over the weekend that he will resign. [https://seekingalpha.com/news/4492882-japan-prime-minister-ishiba-to-step-down]

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