Japan's Q2 2026 GDP grew at just 1.1% annualized, missing economist expectations of 2%, driven by weak private investment and flat consumption amid Middle East tensions. Despite weak domestic demand, markets price in 80% probability BOJ will raise rates on Sept 18, likely relying on weak yen concerns rather than economic fundamentals. For Thai SMEs, this signals potential currency volatility affecting export competitiveness and regional trade dynamics, though the contradiction between weak GDP and strong business sentiment warrants monitoring.