Japan's economy is in decline. The first decline in the last six quarters, following American tariffs.

In the third quarter of 2025, the Japanese economy recorded an annual contraction of 1.80%, marking the first decline in the last six quarters, according to government data. This decrease was primarily driven by a reduction in car deliveries, affected by the new tariffs imposed by the U.S. Although the decline was smaller than analysts' forecasts, which anticipated a decrease of 2.5%, economists believe it is a temporary setback, not the beginning of a recession. Kazutaka Maeda from the Meiji Yasuda Research Institute emphasized that, although the economy is not on a solid pace, there are signs of gradual recovery in 2026. Private consumption has increased for the sixth consecutive month, and capital spending has risen for the fourth consecutive month. Japanese Finance Minister Satsuki Katayama announced economic stimulus measures that could exceed 17 trillion yen, mentioning that these measures will support consumption in the first half of 2026.