Japan Narrowly Escapes Recession as Domestic Spending Counters Export Decline

Tokyo, Monday, 16 February 2026.
Japan narrowly avoided a technical recession in the final quarter of 2025, posting a fragile 0.2% annualized growth rate reported this Monday, February 16, 2026. While private housing rebounded significantly and AI-driven demand boosted capital expenditure by 0.2%, these domestic gains were nearly erased by a sharp 1.1% drop in exports, exacerbated by ongoing tariff uncertainties under the Trump administration. The most intriguing divergence lies in the data: while real economic activity remains anemic, nominal GDP surged by an annualized 2.3%, driven by inflation and corporate profits. This disconnect highlights the precarious nature of Japan’s recovery, which fell significantly short of the market’s 1.6% growth expectation.