Japan’s Economy Contracts 0.4% in Q3 After Six Quarters of Growth

Overview

• Preliminary government data show real GDP fell 0.4% quarter on quarter in July–September, or 1.8% at an annualized rate, matching the market median forecast.
• The reversal is tied to softer household demand and swings in real-estate investment, with tighter environmental rules for new construction adding uncertainty.
• Coverage also cites higher export costs from U.S. tariffs as an additional headwind for Japanese manufacturers.
• Private consumption edged up 0.1% from the previous quarter and business capital spending rose 1.0%, though consumption growth slowed from Q2.
• Core inflation for October is expected near 2.9% year over year, remaining above the BoJ’s 2% target and potentially reinforcing expectations for further policy moves.