Japan’s economy grew at an annualized rate of 2.1% in the first three months of 2026, according to preliminary data released by the Cabinet Office on Tuesday, extending a recovery that has now run for two consecutive quarters.
The real gross domestic product figure — which measures the total value of goods and services produced in the country — rose 0.5% from the previous quarter on a seasonally adjusted basis. The annualized rate represents what the full-year growth would be if the quarterly pace held steady.
The result exceeded expectations. Private consumption, a pillar of Japan’s economic output, increased 0.3% quarter-on-quarter, equivalent to an annualized rate of 1.1%. Public demand also rose 0.3% from the prior quarter, while higher spending by businesses provided additional lift.
The expansion came despite headwinds from elevated energy costs tied to the war in Iran. The Associated Press reported that rising oil prices have posed a challenge for resource-poor Japan, which relies heavily on imported energy.
The Cabinet Office describes the January-March figures as preliminary. Revised data is typically released in the weeks following the initial estimate.
The Japanese economy, the world’s fourth-largest, has navigated a mixed global environment marked by conflict-driven commodity price swings and uneven demand in key export markets. Tuesday’s data suggests domestic consumption and government outlays have so far offset external pressures.
The growth print positions Japan on a modest but sustained expansion track entering the spring quarter. Economists will watch upcoming revisions and April-June indicators for signs of whether the momentum persists as the war in Iran continues to influence energy markets.