Japan fourth-quarter GDP reverses into growth, but misses expectations as rebound underwhelms

Japan's economy grew 0.1% in the fourth quarter of 2025 compared to the previous three months, marking a modest rebound after experiencing a sharp contraction earlier in the year, though the recovery fell short of market expectations. The positive growth figures, released by the Cabinet Office on Monday, ended a period of economic uncertainty for the world's third-largest economy. Analysts had anticipated stronger performance following the previous quarter's decline, with projections hovering around 0.3% growth. The underwhelming recovery was attributed to several factors including persistent consumer caution, weak business investment, and ongoing supply chain disruptions that have hampered production across various sectors. Despite the technical expansion, economists caution that the recovery remains fragile. Private consumption, which accounts for more than half of Japan's GDP, showed minimal improvement as households continued to grapple with rising living costs and uncertain employment prospects. Meanwhile, exports, traditionally a key driver of Japanese growth, faced challenges from fluctuating global demand and the strengthening yen, which made Japanese products more expensive in international markets.