Japan’s Real GDP Turns Negative for the First Time in Six Quarters

Japan’s Cabinet Office released its preliminary GDP figures for the July-September quarter of 2025 on November 17th, showing a 0.4% decline in real seasonally adjusted value after adjusting for price changes, equivalent to a 1.8% decline at an annualized rate. This marks the first negative growth in six quarters.

The median forecast from private sector investors, compiled by Nikkei Quick, was a 2.4% annualized decline. Personal consumption, which accounts for more than half of GDP, rose 0.1% quarter-on-quarter, while equipment investment increased by 1.0%.

The real GDP for July-September, at an annualized rate, was ¥561.7 trillion.

Exports declined by 1.2%, the first negative figure in two quarters. Decreased automobile exports, influenced by a series of US tariff policies, dragged down the overall performance.

Imports declined by 0.1%, the first negative growth in three quarters. Oil, natural gas, and air passenger-related items had a negative impact.

Private residential investment fell 9.4%, marking its first negative growth in three quarters. This decline was largely attributed to a backlash against the rush to buy homes that began in March, driven by stricter energy efficiency standards implemented in April. Since GDP is accounted for based on construction progress, the negative impact was reflected in the July-September period.

Personal consumption grew by 0.1%, a slower pace, but still represents the sixth consecutive quarter of positive growth. The intense summer heat boosted overall beverage sales, including alcohol, and also led to growth in dining out and other food service activities. However, autumn clothing sales were sluggish, and automobile sales were significantly weak.

Equipment investment increased by 1.0%, marking the fourth consecutive quarter of growth. Software investment continued to expand, driven by labor shortages and investment in labor-saving technologies.