By Makiko Yamazaki
TOKYO, Aug 17 (Reuters) - Japan's economy grew slower than expected in April-June, government data showed on Monday, as private consumption softened due to headwinds from higher raw material costs and supply disruptions linked to the Middle East war.
The annualised 1.1% increase in gross domestic product compared with a median market estimate of 2.0% growth in a Reuters poll. It also followed an upwardly revised 1.9% expansion in the previous quarter, extending the economy's growth streak
to three consecutive quarters.
The reading translates into a quarterly rise of 0.3%, compared with the median estimate of a 0.5% increase.
Private consumption, which accounts for more than half of economic output, was flat, falling short of a market estimate of a 0.5% increase.
Consumption and wage trends are key factors the BOJ is watching to gauge economic strength and determine the need for additional rate hikes.
Capital spending, a key driver of private demand, fell 1.2% in the second quarter, versus a market forecast for a 0.4% increase.
Net external demand, or exports minus imports, added 0.5 percentage point to growth.
Exports remained resilient thanks to solid U.S. demand for Japanese hybrid vehicles and sustained global investment in artificial intelligence that supported shipments of semiconductor-related equipment and components.
Looking ahead, analysts cautioned that rising import costs and mounting upstream price pressures could eventually feed through to consumers, posing a risk to spending later this year.
Private consumption could also see a pullback in the July-September quarter, after policy and regulatory changes temporarily boosted demand for durable goods such as automobiles and air conditioners in April-June.
A survey this month by the Japan Center for Economic Research showed 37 economists forecast annualised GDP growth to slow to an average 0.05% in the July-September quarter.
(Reporting by Makiko Yamazaki and Chang-Ran Kim; Editing by Sam Holmes)
