Japan Economy Contracts at Annualized 1.8% in Q3

2025-11-17 00:12 By Farida Husna 1 min. read

Japan’s economy shrank 1.8% on an annualized basis in Q3 2025, a smaller decline than the 2.5% drop expected and a reversal from the slightly revised 2.3% growth in Q2, flash data showed.

It was the first annualized decline in six quarters, driven by the weakest private consumption in three quarters as rising food prices, especially rice, continued to strain households.

Net exports also weighed on growth, with exports falling faster than imports following the U.S.

decision to impose a 15% baseline tariff on most Japanese goods despite a trade deal reached in September.

Still, both government spending and capital expenditure logged their strongest increases in five quarters, supported by front-loaded public investment and business upgrades.

The latest figure comes as new Prime Minister Sanae Takaichi seeks to shore up the economy, with her administration preparing measures to ease living-cost pressures and help exporters navigate tariff-related headwinds.



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