Japan's economy shrank 0.4% in Q3 2025 due to weak spending and investment, despite export gains.

Japan's economy contracted 0.4% in the third quarter of 2025, reversing prior growth and highlighting weak consumer spending and private investment. Despite a rise in exports, domestic demand remained sluggish, underscoring persistent deflationary pressures and low wage growth. The Bank of Japan maintains its ultra-low interest rate policy, while officials consider potential fiscal stimulus. Markets reacted cautiously, with Tokyo and Seoul declining, Hong Kong and Shanghai seeing modest gains, and Singapore's exports surging 22.2% in October. Analysts await GDP data for further insight into Japan's economic trajectory.