Japan's Q4 2025 GDP was revised upward to 1.3% annualized from the preliminary 0.2% reported on February 16, driven by strong business spending. January household spending on goods and private services held steady despite a year-on-year drop, with contained retail gasoline prices easing inflation. Analysts now expect the Bank of Japan to hold rates in April and hike in June.
Japan's economy demonstrated resilience in Q4 2025, with GDP revised to a 1.3% annualized rate from the initial preliminary estimate of 0.2% quarter-on-quarter released by the Cabinet Office on February 16. The upgrade was mainly due to business spending, which increased 1.3% against the flash figure.
January household spending data showed stability in goods and private services spending, even as overall spending declined 1.0% year-on-year—a milder drop than December's 2.6% and below expectations of a 2.4% rise.
With retail gasoline prices remaining contained, inflationary pressures have eased. Consequently, Min Joo Kang, Senior Economist for South Korea and Japan at Seeking Alpha, forecasts the Bank of Japan will keep policy steady at its April meeting before raising rates in June.
