Tokyo skyline with Tokyo Tower
Wong Chunip | E+ | Getty Images
Japan’s economy contracted by a smaller-than-expected 0.4% in the quarter to September compared with the previous three months, supported by both private and government spending.
Economists polled by Reuters had expected a decline of 0.6%.
Japan’s GDP in the third quarter of 2025 decreased by 1.8% on an annualized basis, a slower decline than the expected 2.5% contraction.
Exports of goods and services fell by 1.2%, compared with a 2.3% increase in the second quarter. Net exports contributed to a decline of 0.2 percentage points in GDP.
Japan’s shipments had declined for four consecutive months since May as U.S. tariffs hit exports, but they began to increase in September. The Japanese government signed a trade agreement with Washington in July that lowered export tariffs to the United States from 25% to 15%. The 15% tariff went into effect on August 7th.
Domestic consumption contributed to slowing the economic contraction, with government consumption and private consumption increasing by 0.5% and 0.1%, respectively, compared to the second quarter.
Private demand proved to be the biggest drag on GDP this quarter, with GDP down 0.4% from the previous quarter, and a sharp decline of 9.4% in housing investment pushed the economy down by 0.3 points.
Public demand was a positive sign, growing 0.5% quarter-on-quarter and contributing 0.1 percentage point to Japan’s economy.
This is the latest news. Please check the latest information.
