Japan revised its economic growth estimate for the last quarter of the year, adjusting it from 2.8% to 2.2% due to weakened consumer spending and elevated private inventories. The Cabinet Office released the updated data on March 11, 2025, confirming that Japan’s real gross domestic product (GDP) continued its expansion for the third consecutive quarter. However, private demand contracted by 0.3%, a sharper decline than the initial estimate of 0.1%. Export growth was also revised downward to 1.0% from 1.1%. Economic policymakers face mounting complexities as the Bank of Japan evaluates a potential interest rate increase. The government reaffirmed that Japan’s economy grew at an annual rate of only 0.1%, extending its moderate recovery into a fourth consecutive year. The persistent challenge of deflation, which has hindered economic dynamism, has been partially offset by wage increases that have helped stabilize price levels.

The revised GDP figures highlight ongoing uncertainties regarding Japan’s economic trajectory, particularly concerning global trade policies. Tariff disputes and geopolitical instability, especially in the United States, remain pivotal in shaping economic conditions. Trade Minister Yoji Muto engaged in discussions in Washington on Monday to address potential tariff hikes on Japanese exports, particularly steel and aluminum. The Japanese government warned that these trade barriers could undermine business investments, employment, and supply chains in both nations. Analysts assert that sustaining steady growth will require adaptive policymaking, resilient domestic consumption, and diplomatic negotiations to protect international trade relations. The latest economic data underscores the necessity of balancing fiscal policies with external economic fluctuations to ensure long-term financial stability.