What's happened
Japan's economy contracted by 0.6% in the third quarter, revised from earlier estimates. Exports declined slightly, and private residential investment fell 8.2%. U.S. tariffs on autos and imports have strained Japan-U.S. relations, while Japan's new prime minister seeks economic revival.
What's behind the headline?
The recent GDP revision indicates a less severe contraction than initially feared, but the decline still signals economic strain. The 1.2% drop in exports and 8.2% fall in residential investment reflect the impact of U.S. tariffs and revisions to Japan's building codes. The tariffs on autos, a key sector, continue to threaten Japan's economic stability. Takaichi's rise as prime minister introduces a nationalist tone, which could influence Japan's foreign relations and economic policies. The slight increase in private consumption suggests some resilience, but overall, Japan faces a challenging recovery. The U.S.-Japan trade relationship remains strained, with tariffs and diplomatic tensions likely to persist, affecting future economic prospects.
What the papers say
The Independent reports that Japan's GDP fell 0.6% in the third quarter, revising down from earlier estimates, with exports and residential investment declining. AP News echoes these figures, highlighting the impact of U.S. tariffs on Japan's auto industry and the strain on bilateral relations. Both sources note the rise of Prime Minister Sanae Takaichi, whose nationalist stance is viewed as a potential factor in Japan's economic and political future. The coverage underscores the interconnectedness of trade policies and domestic economic health, illustrating how external pressures influence internal policy shifts and leadership changes.
How we got here
Japan's economy has been affected by global trade tensions, notably U.S. tariffs implemented earlier this year. The tariffs, which were reduced in September, have impacted Japan's auto exports and domestic investment. Japan's new prime minister, Sanae Takaichi, is seen as a nationalist-leaning leader aiming to boost economic growth amid these challenges.
Go deeper
- How will Japan's economy recover from this contraction?
- What impact will Takaichi's nationalist stance have on Japan-U.S. relations?
- Are there signs of resilience in Japan's consumer sector?
Common question
-
What’s Next for Benin After the Coup Attempt?
Recent unrest in Benin has raised concerns about regional stability in West Africa. Following a failed coup attempt, questions are swirling about what caused the unrest, how regional bodies like ECOWAS are responding, and what the future holds for Benin and its neighbors. Below, we explore the key issues and what they mean for the region’s stability.
-
Why Is Japan’s Economy Shrinking in 2025?
Japan's economy has recently contracted by 0.6% in the third quarter, raising questions about the reasons behind this slowdown. Factors like U.S. tariffs, declining exports, and domestic investment are playing a role. Many wonder what steps Japan is taking to turn things around and whether new leadership will make a difference. Below, we explore the key issues affecting Japan’s economy today.
More on these topics
-
Donald John Trump is an American politician, media personality, and businessman who served as the 45th president of the United States from 2017 to 2021.
-
Japan is an island country of East Asia in the northwest Pacific Ocean. It borders the Sea of Japan to the west and extends from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south.