Japan’s Q3 2026 GDP growth market reflects closely matched probabilities around modest expansion, driven by the Q2 2026 outturn of 0.3% QoQ (1.1% annualized) that fell short of expectations amid softer private consumption and business investment. Recent Bank of Japan tightening to a 1.25% policy rate, combined with elevated energy costs from Middle East developments and yen weakness, has weighed on household spending and import prices, while real wage gains and AI-related export and capital expenditure demand provide offsetting support. Forecaster surveys point to roughly 0.25% annualized QoQ growth for the quarter, with Q3 preliminary data due in mid-November serving as the key near-term catalyst that could shift implied probabilities across the 0–1.6% range.