According to data from the Associated Press (AP), in the third quarter of 2025, the Japanese economy contracted by 1.8 percent. The main factors behind this decline were the tariffs imposed by U.S. President Donald Trump on exports from Japan, as well as a significant drop in private investments in housing construction. From July to September, the volume of shipments to international markets decreased by 4.5 percent year-on-year, while imports fell by 0.1 percent.
Investments in housing fell by 9.4 percent compared to the previous quarter, and on a year-on-year basis, the decline was 32.5 percent.
As noted by the agency, the tariff measures have had a serious impact on Japan's economy, which heavily relies on exports. Many of the country's automakers have already begun relocating their production facilities outside of Japan to minimize the impact of tariffs and other trade restrictions.
The new Prime Minister Sanae Takachi, who took office in October, promised to take steps to stimulate the economy, including increasing government spending. However, this could complicate the tasks of the Central Bank in controlling inflation levels.
At the beginning of October, experts predicted that the contraction of the Japanese economy in the third quarter would be 1.2 percent. Analysts emphasize that the world's fourth-largest economy has been severely affected by American tariffs.
