Japan’s economy contracts for the first time in six quarters

Japan's economy shrank 1.8 per cent in the three months through September, as a drop in exports in the face of US tariffs resulted in the first contraction in six quarters, government data showed on Monday.

Shipments from automakers in particular plummeted, following a period of hiking exports before tariffs came into effect.

In Q3 2025, gross domestic product (GDP) adjusted for inflation decreased 0.4 per cent from the April-June period, also hit by a decline in residential investment, the Cabinet Office said in a preliminary report.

Exports fell 1.2 per cent in the July-September period from the previous quarter, down for the first time in two quarters, driven by sluggish US-bound automobile shipments.

Imports dropped 0.1 percent, falling for the first time in three quarters.

Housing investment plunged 9.4 percent from the previous quarter, marking the first decline in three quarters, reflecting a downturn following front-loaded construction ahead of revisions that tightened relevant laws in April.

Japan and the United States signed a trade deal in July to cut the vehicle levy from 27.5 percent to 15 percent. The new rate took effect in mid-September.

WAM