FX.co ★ Japan Economy Expands at Annualized 1.3% in Q4

Japan’s economy expanded at an annualized rate of 1.3% in Q4 2025, a significant upward revision from the initial estimate of 0.2% and slightly above market expectations of 1.2%. This improvement marked a clear rebound from the 2.6% contraction recorded in Q3, with growth primarily underpinned by stronger domestic demand. Private consumption remained robust despite ongoing cost-of-living pressures, while government expenditure picked up, reflecting continued fiscal support measures. Business investment also recorded a solid recovery after a period of stagnation in the previous quarter, indicating improving corporate confidence and a renewed willingness to increase capital spending. In contrast, net exports did not contribute to overall growth, as both exports and imports continued to decline, highlighting soft external demand and persistently weak trade activity.