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.
Gross 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 nonannualized basis from 0.2%.
The 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.
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