Japan Q1 GDP Shrinks More than Expected

2025-05-16 00:01 By Farida Husna 1 min. read

Japan's GDP shrank 0.2% qoq in Q1 of 2025, compared with market expectations of a 0.1% fall and after a 0.6% growth in Q4, flash data showed.

This was the first quarterly contraction in a year, weighed by concerns over the impact of U.S.

trade policies under President Trump and weak demand from major trading partners including China.

The net trade subtracted 0.8ppts from the GDP, as exports fell for the first time since Q1 2024 (-0.6% vs 1.7% in Q4), while imports rebounded (2.9% vs -1.4%).

At the same time, private consumption—accounting for over half of economic output— was flat, missing forecasts of a 0.1% rise.

Government spending also stagnated after rising in the prior three quarters.

Positively, business investment accelerated robustly (1.4% vs 0.8%), posting its strongest gain since Q2 2024.

On an annualized basis, the economy contracted 0.7%, worse than consensus of a 0.2% drop and a reversal from an upwardly revised 2.4% gain in Q4.

It marked the first yearly fall in a year.



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