--- title: "Japan's GDP declines for the first time in six quarters, a large-scale economic stimulus plan is imminent" type: "News" locale: "zh-CN" url: "https://longbridge.com/zh-CN/news/266108392.md" description: "Japan's GDP contracted at an annualized rate of 1.8% in the third quarter, marking the first decline in six quarters. The economic contraction provides justification for Prime Minister Fumio Kishida to implement a large-scale stimulus plan, despite the Bank of Japan's plans to raise interest rates. Private residential investment and exports weighed on the economy, while consumer spending remained nearly flat. Japan's economy is expected to return to a moderate recovery path, and the Kishida cabinet may introduce proactive fiscal spending to boost the economy" datetime: "2025-11-17T02:27:05.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/266108392.md) - [en](https://longbridge.com/en/news/266108392.md) - [zh-HK](https://longbridge.com/zh-HK/news/266108392.md) --- > 支持的语言: [English](https://longbridge.com/en/news/266108392.md) | [繁體中文](https://longbridge.com/zh-HK/news/266108392.md) # Japan's GDP declines for the first time in six quarters, a large-scale economic stimulus plan is imminent According to Zhitong Finance APP, the economic contraction in Japan this summer will provide a rationale for Prime Minister Kishida Fumio to implement a large-scale stimulus plan, even as the Bank of Japan still plans to raise interest rates in the coming months. A report released by the Cabinet Office of Japan on Monday showed that the country's real Gross Domestic Product (GDP) contracted at an annualized rate of 1.8% in the third quarter ending in September, marking the first decline in six quarters. This performance was better than economists' median expectation of -2.4%. ![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251117/1763345918286473.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Due to adjustments in construction industry regulatory policies and the ongoing tariffs imposed by the United States, private residential investment and exports became the main factors dragging down overall output, which aligns with market expectations. Consumption expenditure, which accounts for the largest share of GDP, remained nearly flat and failed to offset the impact of economic weakness. Following the data release, the yen's exchange rate remained largely stable. As of the time of writing, the yen was trading at around 154.55 against the US dollar. "The Japanese economy performed robustly in the first half of the year, and this GDP data indicates a temporary halt in growth momentum," said Yoshimasa Maruyama, chief market economist at SMBC Nikko Securities. "We expect the Japanese economy to return to a moderate recovery path in the future." This data may strengthen Prime Minister Kishida Fumio's cabinet's position that aggressive fiscal spending is needed to boost the economy. The Japanese Prime Minister is expected to announce his first economic plan since taking office as early as this week, with traders focusing on the scale of actual spending while weighing the risks that increased debt issuance may pose to financial market stability. Economist Taro Kimura stated, "The contraction in Japan's third-quarter GDP may reinforce the rationale for the Kishida cabinet to introduce additional fiscal stimulus and increase pressure on the Bank of Japan to slow down the normalization of its policies." This economic downturn had been widely anticipated by economists. Previously, Japan's GDP grew by 2.3% in the second quarter after revisions, approximately four times Japan's growth potential. The sharp decline in housing investment particularly exacerbated this downturn, with a seasonally adjusted decrease of 9.4% compared to the previous quarter, marking the largest drop since the 9.8% decline during the second quarter of the 2009 Lehman crisis. ![image.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251117/1763345938961434.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Private consumption, which accounts for more than half of the economy, only increased by 0.1%, further indicating that households continue to control discretionary spending amid high living costs and stagnant real wages. Japan's core inflation indicator has reached or exceeded the central bank's 2% target for three and a half consecutive years. Kishida Fumio has repeatedly stated that alleviating inflationary pressures is his top priority, with related measures including utility subsidies and gasoline tax reductions. Despite facing profit expectation declines due to tariff pressures, large enterprises still plan to increase capital investment this year according to the latest Tankan survey. Capital expenditure grew by 1.0%, exceeding the expectation of a slight decline, reflecting relatively robust corporate confidence during the period Net exports dragged down growth by 0.2 percentage points in the latest quarter. "Although some companies, such as those in manufacturing, have been impacted by U.S. tariffs, corporate investment remains robust," Maruyama pointed out. "The strength of capital spending reflects the investment demand faced by companies amid labor shortages and market competition, which suggests that the upward momentum in wages is likely to maintain its current level." Economists expect the scale of this economic stimulus to slightly exceed last year's 13.9 trillion yen (approximately 89.9 billion USD). This plan will reveal for the first time how Prime Minister Fumio Kishida intends to balance generous fiscal stimulus with strict fiscal responsibility. Analysts will also closely monitor how Monday's data affects Kishida's view on the Bank of Japan's policy path. She has indicated her preference for the central bank to proceed with gradual interest rate hikes by emphasizing the importance of monetary policy in achieving strong economic performance. The Bank of Japan will announce its next policy decision on December 19. A survey conducted last month showed that half of the central bank watchers expect a rate hike by then, while nearly all economists predict action by January at the latest. "I don't think this will change the Bank of Japan's overall economic outlook," Maruyama stated. 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