TOKYO: Japan’s economy expanded at an annualized rate of 0.2% in the October to December 2025 quarter, government data showed on Monday, marking a return to growth after a contraction in the prior quarter. On a quarter on quarter basis, real gross domestic product rose 0.1% on a seasonally adjusted basis. The outcome was below the median forecast of 1.6% annualized growth in a survey of economists and 0.4% quarter on quarter.
The Cabinet Office’s first preliminary estimate followed a decline in the July to September 2025 quarter, when real GDP fell 0.6% from the previous quarter in the second preliminary estimate. The October to December result meant Japan did not record two straight quarters of contraction, a commonly used definition of a technical recession. Nominal GDP rose 0.6% from the previous quarter, the government said.
Domestic demand increased overall as several private sector components moved higher. Private consumption rose 0.1% from the previous quarter, the seventh consecutive quarterly increase, according to a government statement accompanying the release. Private non residential investment increased 0.2%, while private residential investment rose 4.8%. Public investment declined 1.3% over the quarter.
Trade data in the release showed both exports and imports decreased at the same pace. Exports fell 0.3% from the previous quarter and imports also fell 0.3% in real terms, seasonally adjusted. The government said the net exports contribution to growth was broadly flat in the quarter. Changes in private inventories subtracted 0.2 percentage point from the change in real GDP, based on the official contribution measure.
Domestic demand and trade components
The fourth quarter release also included calendar year figures for 2025. Japan’s real GDP grew 1.1% from the previous year, while nominal GDP increased 4.5%, according to the Cabinet Office. The GDP deflator for 2025 was 3.4%, and the domestic demand deflator was 2.8%. On a contribution basis, domestic demand added 1.3 percentage points to real GDP growth in 2025, while external demand subtracted 0.3 percentage point.
The Cabinet Office also reported reference measures on final demand. Real final demand rose 0.3% from the previous quarter, which corresponds to 1.1% on an annualized basis, while nominal final demand increased 0.8% over the quarter, or 3.2% annualized. The estimates are subject to revision as additional data are incorporated, and the government has scheduled the second preliminary estimate for the October to December 2025 quarter for March 10, 2026.
Full-year 2025 output and prices
Quarterly GDP in Japan is released first as a preliminary estimate and later revised as more complete information becomes available on areas such as corporate spending, trade, and inventories. The latest figures were compiled using chain linked real measures and seasonally adjusted series for quarter to quarter comparisons. The Cabinet Office publishes detailed breakdowns of expenditure components, including household spending, private investment, government demand, trade, and inventory changes.
Japan’s quarterly pattern in 2025 included expansions earlier in the year, followed by the July to September contraction and the return to growth in October to December. The fourth quarter data showed household spending and private investment categories increasing from the previous quarter, while trade volumes declined and inventories reduced overall growth. The release provided the first official estimate for year end 2025 output and an updated set of annual measures for the full calendar year. – By Content Syndication Services.