Japan GDP Growth Slows to 0.2% in Q4: Japans economy started to grow a bit again in the last part of the year. However it did not do well as people thought it would. This shows that Japans economy is still having some problems. These problems will be a challenge for Prime Minister Sanae Takaichi. She just won an election. Now she has to deal with Japans economy. Japans economy is still an issue, for Prime Minister Sanae Takaichi to figure out.
The government released some information on Monday about the economy. The gross domestic product, which is the GDP in the largest economy in the world did not do very well. It only grew at a rate of 0.2 percent from October to December. This is a lot less than what people thought it would be. In fact a poll, by Reuters said it would grow at a rate of 1.6 percent. The GDP is still trying to recover from the quarter when it actually got smaller by 2.6 percent. The GDP is still very weak. The gross domestic product is not doing great.
The economy is growing,. Not as fast as people thought it would. It went up by 0.1 percent, which is not what people were expecting. They thought the economy would go up by 0.4 percent. This is what happened over the quarter. The economy did not do well as people wanted it only had a small increase of 0.1 percent.
The economy is not getting better fast as we thought said Kazutaka Maeda, who is an economist at Meiji Yasuda Research Institute. He said that people are not spending much money as we hoped and companies are not investing as much as we thought they would. Also the economy is not getting a boost from exports, which is one of the areas that the economy relies on. Kazutaka Maeda thinks that consumption, capital expenditure and exports are all very important, for the economy but they are just not doing well.
Fiscal Push in Focus
Takaichis administration just won an election and now they are getting ready to spend some public money in a smart way to help people buy more things and make the economy grow again. They want to make sure that people have money to spend on the things they need so they are coming up with a plan to help boost consumption and get the economy moving. This is a deal, for Takaichis administration because they really want to make sure that the economy is doing well.
PM Takaichi is trying to help the economy by spending money. This seems like an idea now. Marcel Thieliant, who is in charge of Asia-Pacific, at Capital Economics said that PM Takaichis plan looks like it was a move.
Some people who study the economy think that the economy is not growing fast. This slow growth may make people want the government to stop charging tax on food. The government may also need to make a budget sooner than they planned. This new budget would be in addition, to the one they already have.
The economy is really slow now. This means Takaichi is more likely to do a couple of things. Takaichi will probably stop the sales tax, on food for now. Takaichi will also probably make a budget plan in the first six months of the fiscal year. This is what Thieliant said. Takaichi is going to take these steps because the economy is not doing well.
People who buy and sell things on the market are still being careful. Japan already has a lot of debt which’s a big problem. As one person who helps make decisions in Tokyo said, Japan has the debt of any developed country. If Japan makes any changes to how it handles money the market will pay close attention to what Japan does, with its money.
Bank of Japan Policy Dilemma
The economy is not doing great which is shown by the GDP data. This is happening at the time that the Bank of Japan is making some changes. The Bank of Japan is slowly moving away, from the loose monetary policy that it has had for a long time. The Bank of Japan had this policy for years.
Economists think the new numbers will not change what the central bank does now. The central bank may not be, in such a hurry to raise interest rates again soon because the economy is not growing fast as it was. This means the central bank will probably think carefully about when to raise interest rates. The interest rates are what the central bank uses to control the economy.
Takeshi Minami, the economist at Norinchukin Research Institute said that the GDP had some positive growth.. The growth of the GDP was not very strong. He also said that it does not seem like there will be another increase in the GDP soon. The chance of this happening in the future seems to be getting smaller said Takeshi Minami, the chief economist, at Norinchukin Research Institute when talking about the GDP.
Inflation is still a worry. The Bank of Japan is probably thinking about how to keep inflation under control. Shinichiro Kobayashi of Mitsubishi UFJ Research and Consulting said that of this increase, in interest rates hurting the economy the Bank of Japan is focused on containing inflation. This is what Shinichiro Kobayashi thinks will happen with the Bank of Japan and inflation.
The demand for things, in our country is still really weak. People are not buying much as they used to and this is making the economy a bit shaky. The domestic demand remains fragile. It is a big concern.
People in Japan buy a lot of things. That is more than half of what Japans economy is. The amount of things people bought went up a little 0.1% in the last part of the year. It was not as much as before when it went up 0.4%. Private consumption in Japan is still not great because food is really expensive. That is making it hard for people to spend money on other things. Private consumption is what happens when people, in Japan buy things they need and want.
The amount of money that companies spent on things like new buildings and equipment went up a little bit by 0.2 percent. This is less than what people thought it would be which was 0.8 percent. It seems like companies are being careful, about spending money now so they did not spend as much as expected. This is what the Reuters survey found out about capital expenditure.
The economy can really grow in a way if peoples real wages start going up again. Kobayashi said this is what needs to happen for the economy to do well. He thinks that if real wages can just start growing then the economy can have sustainable growth. This means the economy can keep growing without any problems. Kobayashi is talking about wages because they are very important, for the economy. If real wages are growing then people have money to spend and this helps the economy to grow.
Trade and the “Trump Factor”
The company did not get any help from demand to grow during this time. Even though exports did not go down much as they could have external demand, from other countries did not really add anything to the overall growth of the company. External demand was basically not a factor.
The situation with trade is still pretty messy because of the problems between countries under U.S. President Donald Trump. The United States just made official a basic 15% tax on everything it imports from Japan, which is lower than what they were talking about before especially with cars and other things. The trade tensions are still an issue and the United States and Japan are trying to figure things out. The United States and Japan have to deal with these trade tensions and the 15% tax, on imports.
The effect of tariffs seems to have reached its limit but companies may still be careful Maeda said. Companies like these tariffs are not going away so companies will probably stay careful, about the tariffs.
Japanese stocks went down after the Japanese government released the information about the Gross Domestic Product. At the time the bond markets, in Japan did not do much they just stayed calm.
Outlook for 2026
The Japan Center for Economic Research did a survey. This survey showed that economists think the economy will grow 1.04 percent in the first part of the year. The Japan Center for Economic Research survey also showed that economists think the economy will grow 1.12 percent in the second part of the year. The Japan Center, for Economic Research survey is talking about the growth of the economy this year.
The people who study this stuff are saying that the latest numbers show Japan might have a time getting things going really well as it heads into 2026. Japan is going to have to work to build up a lot of steam for Japan to do well in 2026.
“Growth has returned, but it is hardly roaring back ” one analyst said. The real test now is whether wages and consumption and investment can all move together at the time.
News in Brief of Japan GDP Growth Slows to 0.2% in Q4
The economy in Japan did not do well. Japans GDP only went up by 0.2 percent over the year in the last quarter. This is a lot lower than what people thought it would be, for Japans GDP.
The growth got better after it went down by 2.6 percent in the quarter, before that.
The economy is not doing well because people are not buying things and companies are not spending money. This is a problem, for the recovery of the economy. The weak consumption and the low capital spending are really hurting the recovery.
The Bank of Japan will probably keep paying attention to the inflation problem even if the economy is not growing fast. The Bank of Japan is still worried, about inflation.
Prime Minister Sanae Takaichi may consider tax relief and early fiscal stimulus measures.
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