Japan's Economy Bounces Back as Q4 Growth Hits 0.1%

Japan's economy has narrowly avoided a technical recession, with a 0.1% growth in the fourth quarter of 2025 compared to the previous three months. This marks a reversal of the 0.7% contraction in the third quarter, although it missed economists' expectations of a 0.4% expansion. Output rose 0.2% annually, compared to forecasts of 1.6%. The modest expansion was drive by private consumption, offsetting weakness in exports and public spending. The growth is attributed to the government's economic measures and accommodative financial conditions. The Bank of Japan has also raised its economic growth forecast for the fiscal year ending March 2026 to 0.9% from 0.7%. Japan's inflation slowed to 2.1% in January, its lowest level since March 2022.