Japan economy contracts 0.4% in third quarter as US tariffs hit
Bank of Japan governor Kazuo Ueda attends a press conference at the central bank's headquarters in Tokyo, Oct. 30. The Bank of Japan kept interest rates on hold Oct. 30 at 0.5 percent, warning of lingering economic "high uncertainties" linked to U.S. trade tariffs. AFP-Yonhap
TOKYO — Japan's economy shrank 0.4 percent in the three months to September, official data showed Monday, as U.S. tariffs hit and new Prime Minister Sanae Takaichi's government prepares a major stimulus package.
The quarter-on-quarter reading for gross domestic product beat market expectations of minus 0.6 percent but was the first contraction since the first three months of 2024.
The preliminary, seasonally adjusted figure follows growth of 0.6 percent — revised upwards from an earlier reading of plus 0.5 percent — for the April to June quarter.
The data from the cabinet office also showed that a drag on economic growth was weak residential investment.
Trade officials in July reached a deal that saw the United States lower tariffs on Japanese goods to 15 percent from a threatened 25 percent.
Japanese cars were taxed at a higher rate of 27.5 percent and the reduction to 15 percent did not take effect until mid-September.
Japan's U.S.-bound car exports slumped 24 percent year-on-year in value in September, a major blow for an automotive sector that accounts for around eight percent of jobs in the Asian nation.