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Japan's Q4 Economy Grows 0.2%, PM Takaichi Faces Growth Recovery Challenges

Japan's Q4 Economy Grows 0.2%, PM Takaichi Faces Growth Recovery Challenges

MGR Online•International•1d ago

Reader Briefing

Japan's Q4 GDP growth of 0.2% falls short of market expectations, posing significant challenges for Prime Minister Sanae Takaichi's economic recovery agenda.

  • •Japan's Gross Domestic Product (GDP) for the fourth quarter of last year (Oct-Dec 2025) grew by a meager 0.2%.
  • •This figure is significantly lower than the market's forecast of 1.6% and signals ongoing economic struggles due to high living costs.
  • •The weak growth puts pressure on Prime Minister Sanae Takaichi's administration as it plans fiscal stimulus measures.
  • •Despite these economic headwinds, the Liberal Democratic Party (LDP) secured a landslide victory in a recent election.

Overview

  • •Q4 2025 (Oct-Dec) saw Japan's GDP grow by 0.2% compared to the same period in 2024.
  • •Japan's Q4 2025 GDP growth was 0.2%, significantly below the market forecast of 1.6%.
  • •The Japanese economy is grappling with prolonged high cost of living, impacting domestic confidence and demand.
  • •Weak consumption, capital expenditure, and exports are not performing as strongly as hoped, indicating a lack of economic recovery momentum.
  • •The Bank of Japan (BOJ) has reiterated its stance to maintain low interest rates and a normal financial environment, making fiscal stimulus through monetary policy less likely.
  • •The government of Prime Minister Sanae Takaichi is preparing targeted public spending policies to boost consumption and economic growth.
  • •Investors are closely watching Takaichi's election promise to suspend consumption tax hikes, a move that has caused market volatility due to concerns about Japan's high public debt.
  • •Marcel Thieliant of Capital Economics suggests that economic slowdown increases the likelihood of Takaichi not only proceeding with suspending the sales tax for food items but also issuing an supplementary budget in the first half of the fiscal year starting April.

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Key Entities

Place

Japan(ญี่ปุ่น)ℹ️
The nation whose economic performance is the subject of the article.

Person

Prime Minister Sanae Takaichi(นายกรัฐมนตรี ซานาเอะ ทาคาอิจิ)ℹ️
The current Prime Minister of Japan facing economic challenges and preparing stimulus policies.
Marcel Thieliant(มาร์เซล ทีเลียนต์)
Head of Asia-Pacific at Capital Economics, providing analysis on Japan's economic situation and potential policy responses.

Organization

LDP (Liberal Democratic Party)(พรรคแอลดีพี)ℹ️
The political party led by Prime Minister Sanae Takaichi, which recently won a landslide election victory.
Bank of Japan (BOJ)(ธนาคารกลางญี่ปุ่น (บีโอเจ))ℹ️
The central bank of Japan, which has reiterated its stance on maintaining low interest rates.
Reuters(รอยเตอร์)ℹ️
The news agency whose survey of economists' expectations is cited in the article.
Meiji Yasuda Research Institute(สถาบันวิจัยเมจิ ยาสึดะ)
The research institute where Kazutaka Maeda works as an economist.
Capital Economics(แคปิตอล อิโคโนมิกส์)ℹ️
The economic research firm where Marcel Thieliant holds a leadership position.

Timeline

2026(2025)
The year that the fourth quarter data for Japan's GDP pertains to.
2025(2024)
The year referenced for year-on-year comparison of Q4 GDP data.
February 16(16 ก.พ.)
The date when Japanese authorities released the Q4 GDP figures.
February 16(16 ก.พ.)
The date when Japanese authorities released the Q4 GDP figures.
December(ธ.ค.)
The month indicating the end of the fourth quarter of 2025 and the period of the Bank of Japan's recent interest rate hike.
April(เม.ย.)
The month that marks the beginning of the fiscal year in Japan, and when a supplementary budget might be introduced.