US tariffs likely push Japan into first economic contraction in six quarters: Reuters Poll
- - US tariffs likely push Japan into first economic contraction in six quarters: Reuters Poll
ReutersNovember 7, 2025 at 2:18 AM
0
A view of the Tokyo skyline is seen through the window of a special bus transporting journalists to the media hotel during the Tokyo 2020 Olympic Games in Tokyo, Japan, August 2, 2021. REUTERS/Amr Abdallah Dalsh
TOKYO (Reuters) -Japan's economy probably contracted for the first time in six quarters in the July-September period after being battered by U.S. President Donald Trump's tariff policies, a Reuters poll showed on Friday.
Gross domestic product (GDP) in real terms probably shrank an annualised 2.5% in the third quarter, according to the median forecast of 18 economists, after an annualised 2.2% expansion in the second quarter.
Without annualisation, the third-quarter contraction was estimated at 0.6%.
Analysts attributed the slowdown to a slump in exports due to U.S. tariffs. External demand or net exports, which is exports minus imports, probably shaved 0.3 percentage points from the third-quarter GDP, after it added 0.3 points in the second quarter.
Other negative factors include a decline in housing and inventory investment after front-loading in the previous quarter.
"The Japanese economy posted an expansion that could be almost called "too good" through the first half of 2025," analysts at SMBC Nikko Securities said in their analysis.
"However, with the weight of newly imposed tariffs coming to the fore, it was compelled to undergo a correction at least temporarily."
Private consumption, which accounts for more than half Japan's GDP, was expected to have inched up 0.1% in July-September, losing steam from 0.4% growth in April-June.
Capital expenditure growth was estimated at 0.3%, the same as the previous quarter.
The U.S. agreed to a 15% tariff rate on Japanese imports when Washington and Tokyo reached a deal in July, less than the initial 27.5% it had threatened on autos and 25% for most other goods.
But the impact is seen as significant, especially for the auto industry, because the duties are still much higher than their previous rate of 2.5%.
"With real wages stagnating, personal consumption is also declining, suggesting that economic activity has entered a stagnation phase," said Saisuke Sakai, chief Japan economist at Mizuho Research & Technologies.
The government will release the July-September GDP data on November 17 at 8:50 a.m. (2350 GMT on November 16).
(Reporting by Satoshi Sugiyama; Editing by Kate Mayberry)
Source: “AOL Money”
