Japan's GDP Grows for Third Straight Quarter but Consumer Spending Stalls

Feb 18, 2025 | News On Japan

TOKYO - Japan's real gross domestic product (GDP) grew at an annualized rate of 2.8% from October to December last year, marking the third consecutive quarter of positive growth. However, the results are not entirely encouraging, as weak consumer spending remains a concern.

The economy benefited from a weak yen, which boosted inbound tourism and increased exports, while strong corporate earnings supported a rise in capital investment. Yet, despite the overall expansion, personal consumption—accounting for roughly 60% of GDP—edged up only 0.1%, with its growth rate slowing compared to the previous quarter.

While winter bonuses remained at a high level, rising food prices, including historically expensive rice, prompted consumers to cut back on spending. Wage increases have struggled to keep pace with inflation, and data released today showed that personal consumption for the entire year of 2023 declined by 0.1%, marking the first annual decrease since 2020.

Looking ahead, Japan faces further economic uncertainty. More than 7,000 products are set to see price hikes by April, and concerns over potential tariff policies under former U.S. President Donald Trump are adding to the unpredictability. As a result, any economic recovery is expected to take more time.

Source: TBS

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