TOKYO – Japan experienced an economic growth rate of 2.8% in the October-December period, surpassing expectations. This growth was primarily driven by consistent exports and a stable level of consumption.
On a quarterly basis, the fourth largest economy in the world expanded by 0.7%, marking its third consecutive quarter of growth, according to data released by the Cabinet Office on Monday.
In 2024, Japan recorded a modest 0.1% growth in seasonally adjusted real GDP for the year. This indicator measures the value of a country’s goods and services produced. This growth marks the fourth consecutive year of expansion for the Japanese economy.
Private consumption grew at an annual rate of 0.5% during the three months through December, holding up while losing momentum. Exports jumped 4.3%, and capital investment increased 0.5%.
The positive data sent Japan’s benchmark Nikkei 225 higher, as well as other Asian markets.
Some analysts think the anticipation of President Donald Trump’s tariffs may have lifted trade.
Unlike the U.S. and some other nations, Japan has been dogged by deflation, and these lower prices stifle growth. But recent wage growth has kept deflationary trends in check.
Recent data show inflation is at about the Bank of Japan’s target of 2%. Higher prices are crimping consumer spending, which makes up for more than half the economy.
The central bank may move to further raise interest rates, which were at zero or below zero for years to wrest the economy out of deflation. It raised its key interest rate to about 0.5% from 0.25% last month, noting that inflation is holding at a desirable target level. The next monetary policy meeting is in March.
“Stronger growth may reinforce expectations for the Bank of Japan to push through with further hikes, while the slowdown in private consumption growth may be addressed by the prospects of higher wages ahead,” said Yeap Jun Rong, market strategist at IG.
Copyright 2025 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed without permission.
