Breakdown of Real GDP Components (QoQ Changes)
- Domestic Demand: Slipped by -0.2%, driven by a -0.8% drop in public demand and flat private demand at 0.0%.
- Private Consumption & Investment: Household and private consumption both fell by -0.1%, residential investment contracted by -0.5%, and business equipment investment dropped sharply by -1.2%.
- Inventories & Public Sector: Private inventory accumulation added +0.3% to GDP, and government consumption surged by 1.6%, which helped offset a -0.5% drag from public inventories and a -0.1% dip in public investment.
Net exports of goods and services acted as the primary economic driver during the quarter, contributing +0.5% to overall Real GDP growth. Exports of goods and services edged upward by 0.5% (adding +0.1% to GDP), while imports contracted by -1.5%, which mechanically contributed +0.3% to GDP growth due to import subtraction.
The GDP deflator rose by 0.9% QoQ and 2.6% YoY, reflecting ongoing inflationary momentum across the broader economy. Meanwhile, the domestic demand deflator climbed 1.2% QoQ and 2.9% YoY, underscoring persistent price pressures on internal transactions.
Real Gross Domestic Income (GDI) was entirely flat at 0.0% QoQ, while Real Gross National Income (GNI) fell by -0.4% QoQ (-1.8% YoY) due to lower net primary income from abroad. On the household side, real compensation of employees grew by 0.8% QoQ, offering a bright spot as real wages showed tangible improvement.
Over recent annual cycles, the Japanese economy maintained steady expansion alongside elevated nominal rates. In Fiscal Year (FY) 2025, Real GDP grew by 0.9% against a Nominal GDP increase of 4.3%. For Calendar Year (CY) 2025, Real GDP expanded by 1.2%, while Nominal GDP advanced by 4.6%.