Japan's GDP Grows 0.1% in Q4 2025

Japan's economy returned to modest growth in the fourth quarter of 2025, expanding by 0.1 percent from the previous quarter, according to preliminary data released by the Cabinet Office on February 16. The figure, which covers the October-to-December period, marked a reversal from a 0.7 percent contraction in the third quarter but fell short of market expectations for a 0.4 percent increase. On an annualized basis, gross domestic product rose 0.2 percent, well below forecasts of 1.6 percent and following a revised 2.6 percent annualized decline in the prior period.

The subdued performance highlighted ongoing challenges in the world's fourth-largest economy, even as some headwinds eased. Private consumption, which makes up more than half of Japan's economic output, increased by 0.1 percent, in line with estimates but down from a 0.4 percent gain in the third quarter. Economists attributed the slowdown to persistently high food prices, which continued to pressure household spending despite broader inflationary trends.

Business investment provided a slight lift, with capital spending rising 0.2 percent, though this undershot projections for a 0.8 percent advance. The modest rebound...