MNI: Japan Q4 GDP Posts 1st Growth in 2 Quarters

Japan's economy over Q4 rose 0.1% q/q, or an annualised 0.2%, marking the first growth in two quarters, but the rebound from the Q3 contraction was weak as gains in capital investment and private consumption were modest, preliminary GDP data released by the Cabinet Office showed Monday.

Q4 growth was weaker than the MNI median forecast, which pointed to a rise of 0.5% q/q, or an annualised 2.0%.

Private consumption, which accounts for about 60% of Japan’s GDP, rose 0.1% q/q in Q4 following a revised 0.4% rise in Q3.

Business investment rose 0.2% q/q in Q4, the first increase in two quarters, following a revised 0.3% fall in Q3.

Net exports of goods and services made a neutral 0.0 percentage point contribution to total domestic output after lowering Q3 GDP growth by 0.3 percentage points.

Exports fell 0.3% q/q in Q4 after falling 1.4% in Q3. Imports fell 0.3% in Q4 after declining 0.1% in the previous quarter.

Private-sector inventories contributed negative 0.2 percentage point to Q4 GDP following -0.1 percentage point in Q3, while public investment fell 1.3% q/q, contributing -0.1 percentage point to GDP.

Q3 GDP was revised to -0.7% q/q, or an annualised -2.6%.

GDP rose 1.1% y/y in 2025, the first expansion in two years, following a 0.2% contraction in 2024.

While the Q4 rebound was widely expected, the pace was weak, shifting focus to how the economy has evolved in the first quarter of 2026.

Officials at the Bank of Japan are closely monitoring how the economy — particularly exports and production — has developed in and after January. (See MNI BOJ WATCH: Ueda Points To Hikes, Gives No Clues On Timing)

Private economists expect the economy to continue expanding in Q1, supported by solid capital investment and private consumption.