Japan Confirms Economy Expanded as Takaichi Urges Investment

h6u]rgip7d1c69rh11kzgj73_media_dl_1.png Cabinet Office. Note: Previous fArticle content(Bloomberg) — Japan’s economy expanded in the final quarter of 2025 more than initially reported thanks to stronger corporate investment, as Prime Minister Sanae Takaichi urges further spending to develop key industries.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentGross domestic product rose at an annualized pace of 1.3% versus the prior quarter in the three months through December, with the revised figures showing that business spending was stronger than reported in preliminary figures. Business investment was upgraded to 1.3% growth on a non-annualized basis from 0.2%.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentThe upgrade to Japan’s fourth-quarter economic performance comes just as the outlook for business activity is clouding over owing to the conflict in the Middle East. Elevated oil prices and a slide in the yen will put a strain on the economy through costlier imports if the situation persists, possibly prompting Takaichi to consider ramping up fiscal support.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article content“While external demand remains sluggish, consumption and capital investment are solid, confirming positive growth driven by domestic demand,” said Taro Saito, head of economic research at NLI Research Institute. “I expect this trend to continue into the current quarter, sustaining positive growth, but the impact of high crude oil prices will fully materialize in the second quarter, posing a risk it could weigh on consumption.”Article contentIn addition to affecting households, the impact of overseas developments could threaten the economy in other ways. Japan is attempting to keep its trade deal with the US intact following a US court ruling against President Donald Trump’s tariffs. Pressure on Japanese companies to invest in the US as part of the deal could discourage domestic spending. Meanwhile, China continues to step up retaliatory measures in response to Takaichi’s remarks related to Taiwan.Article contentArticle contentGiven the uncertainty surrounding the outlook, the Bank of Japan is widely expected to hold its settings steady when it next sets policy on March 19. Pricing in the overnight index swaps market shows traders see a slightly larger than 50% chance of a hike at the April meeting.Article contentWhat Bloomberg Economics Says…Article content“Higher energy costs would weigh on growth, deepening the cost-of-living squeeze on households and compressing corporate profits. In isolation, that argues for keeping borrowing costs steady. But higher oil prices would risk stoking inflation and lifting expectations. We expect the BOJ to prioritize that risk and deliver a 25-basis-point hike in April.”Article content— Taro Kimura, economistArticle contentClick here to read the full reportArticle contentConsumer spending was revised higher, in a rare sign of resilience for domestic demand as households continue to cope with inflation that hovered above the BOJ’s 2% target for four consecutive years through 2025. Net exports stayed flat.Article contentA separate report Tuesday showed that household spending adjusted for inflation fell 1% in January from a year earlier, the Ministry of Internal Affairs and Communications reported, a result that missed the consensus estimate of a 2.4% advance. Outlays on housing and education led the declines in that report.Article contentEven before strife erupted in the Middle East the premier was planning to offer companies incentives via her proactive spending measures so that Japanese companies would increase their domestic investment. She also plans to ease the burden of inflation on households with various measures. Takaichi said Monday she’s considering new steps on gasoline.Article content“To support consumption, the Takaichi administration should actively implement measures to suppress gasoline prices,” Saito said.Article content(Updates with economists’ comments.)Article contentTrending Vietnam Plans to Scrap Fuel Import Curbs to Keep Supply Flowing PMN Business Here's why bets are rising for interest rate hikes including for Canada Economy Qatar to push LNG expansion plans to 2027 after Iran drone attack Oil & Gas Subscriber only. 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