Japan's economy barely grows as exports drag; 2025 expansion just 1.1%

Japan's economy expanded at an anemic 0.2 per cent annual pace in the last quarter, the government reported Monday, with growth for all of 2025 at just 1.1 per cent.

Private consumption rose at a 0.4 per cent annualized pace in October-December, but that was offset by a 1.1 per cent drop in exports, the latest seasonally adjusted preliminary data show.

Japan's export-reliant economy has been shaken by President Donald Trump's tariffs, but has been growing at a lackluster pace for years. Prime Minister Sanae Takaichi is expected to roll out policies to help revive the economy after a landslide victory in a general election earlier this month.

 

Takaichi has promised to spend more and to suspend Japan's sales tax on food, among other measures.

Japan's GDP contracted 0.7 per cent in July-September, quarter-to-quarter, after growing 0.5 per cent in April-June. Since the economy returned to growth in the latest quarter, the country narrowly avoided a technical recession, which is two straight quarters of contraction.

On a quarterly basis, the economy grew 0.1 per cent in October to December, the Cabinet Office reported.

The 1.1 per cent expansion last year was the fastest since 2022, when Japan was recovering from the disruptions caused by the Covid-19 pandemic.

The government is projecting that the economy will expand at an average rate of about 0.6 per cent in the near term.