Japan's economic growth has slowed significantly in the last quarter, with a mere 0.2% annual expansion, according to government data. This follows a disappointing 1.1% growth for the entire year of 2025. The country's export-driven economy is facing headwinds, with a 1.1% drop in exports during the October-December period, despite a 0.4% rise in private consumption. These figures highlight the ongoing challenges Japan's economy is grappling with, despite recent policy promises by Prime Minister Sanae Takaichi to stimulate growth. The country narrowly avoided a technical recession, which would have been two consecutive quarters of contraction, after a 0.7% contraction in the July-September quarter. The 1.1% expansion in 2025 was the fastest since 2022, when Japan was recovering from the COVID-19 pandemic, but the government projects a more modest 0.6% average growth in the near future. The situation underscores the delicate balance Japan's economy is currently facing, with the need for continued policy support to sustain growth.
