Japan GDP Growth Annualized

Japan’s economy contracted by 0.2% on an annualized basis in Q1 2025, performing better than the initial estimate of a 0.7% decline. Still, the figure marked a sharp reversal from the downwardly revised 2.2% growth in Q4 and represented the first annual contraction in a year. The downturn was partly driven by a drag from net exports amid rising uncertainty over U.S. trade policy under President Donald Trump, with Japan’s vital automotive sector facing the threat of steep new tariffs. Government spending also declined for the first time in five quarters, recording its steepest drop in nearly two years. On a brighter note, both private consumption and capital expenditures grew for the fourth consecutive quarter, with growth gaining pace in both categories.