Japan Posts Modest Growth in Q4

Japan’s GDP grew 0.3% qoq in Q4 2025, higher than the flash estimate of a 0.1% rise and in line with market expectations. The latest reading followed a 0.7% contraction in Q3 and was supported by stronger domestic demand. Private consumption was revised up to a 0.3% increase (vs an earlier estimate of 0.1% and after a 0.5% gain in Q3), suggesting household spending held up amid Tokyo's massive fiscal support to ease cost pressures. Business investment was also adjusted sharply higher to 1.2% (vs 0.2% in the preliminary estimate, after flat growth in Q3), indicating firmer corporate spending on capacity and equipment. Government spending rose 0.4% (vs 0.1% in flash data, after a 0.1% gain in Q3), reflecting continued fiscal support. Meanwhile, net trade made no contribution to growth as both exports (-0.3% vs -1.4%) and imports (-0.3% vs -0.1%) declined, partly amid softer external demand and weaker domestic import needs.

Japan’s GDP grew 0.1% qoq in Q4 2025, rebounding from a 0.7% drop in Q3 but missing market forecasts of a 0.4% increase, flash data showed. While business investment recovered (0.2% vs -0.3% in Q3), private consumption rose the least in a year (0.1% vs 0.4) amid persistent cost pressures, notably food prices. Meanwhile, government spending was subdued (0.1% vs 0.1%), and net trade did not contribute to growth, with both exports (-0.3% vs -1.4%) and imports (-0.3% vs -0.1%) declining. The latest reading suggests the drag from U.S. tariffs, with a baseline of 15%, is gradually easing, while diplomatic tensions with China persist. It also comes as Tokyo prepares to ramp up investment through targeted public spending following a sweeping election victory.

Japan’s GDP contracted 0.6% qoq in Q3 2025, deeper than the flash estimate of a 0.4% decline and market forecasts for a 0.5% drop. The latest figure followed a downwardly revised 0.5% growth in Q2 and marked the first quarterly contraction since Q1 2024, with business spending slipping for the first time in three quarters (-0.2%, compared with the flash estimate of a 1.0% gain and missing forecasts for a 0.4% growth, after a 1.3% rise in Q2). The weaker reading highlighted ongoing pressure from higher borrowing costs. Private consumption remained soft, edging up 0.2%, slightly above both the preliminary estimate and consensus of 0.1%, but slower than a 0.3% rise in Q2. Government spending also eased (0.2%, compared with the flash reading of 0.5% and after a 0.3% rise previously). Net trade added further drag (-0.2ppts), with exports (-1.2% vs 2.3% in Q2) falling faster than imports (-0.1% vs 1.3%) after Washington imposed a 15% baseline tariff on most Japanese goods in September.