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Japan’s Economy Skirts Recession, Shows Modest Growth in Late 2025
Tokyo – Japan’s economy managed to avoid a technical recession in the fourth quarter of 2025, posting a slight uptick in growth that prevented two consecutive quarters of contraction, according to government data released Monday.
Preliminary estimates from Japan’s Cabinet Office reveal that the real gross domestic product (GDP) saw a modest increase of 0.1% from October to December compared to the previous quarter. On an annualized basis, this translates to a 0.2% rise.
Nominal GDP outpaced real growth, increasing by 0.6% quarter-on-quarter, or approximately 2.2% annually. For the entire calendar year 2025, real GDP climbed by 1.1%.
Both domestic demand and net exports contributed marginally to the growth, each adding 0.0 percentage points. Private consumption saw a slight increase of 0.1%, amounting to an annualized rate of 0.4%.
However, exports experienced a decline of 0.3%, resulting in a -1.1% annualized rate. The report also indicated a rise in economy-wide prices, as measured by GDP deflators, which accounts for the stronger nominal growth.
“Domestic demand made a positive contribution overall, resulting in modest positive growth for the economy as a whole,” stated Chief Cabinet Secretary Minoru Kihara on Monday morning, as reported by The Japan Times. He added, “We expect that improvements in the income environment will support consumption going forward.”
These figures arrive on the heels of the Bank of Japan’s January 23 economic outlook for 2026, which projected continued moderate growth for the economy. Based on this assessment, the central bank elevated its economic growth forecast for the fiscal year from 0.7% to 0.9%.