Currently, the Japanese economy is once again turning red and is on the verge of recession. In the third quarter of 2025, Japan's real gross domestic product fell 1.8% at an annualized rate, the first negative increase in six quarters. Affected by the US tariff policy, Japan's exports to the US fell 3.1% year on year in October, shrinking for 7 consecutive months. Exports of goods and services trade fell 1.2% month-on-month in the third quarter, and the contribution of external demand to economic growth changed from positive to negative. At the same time, domestic demand is also difficult to form effective support. Personal consumption, which accounts for more than half of the Japanese economy, increased slightly by 0.1% month-on-month, and prices continued to increase people's living burdens and suppress purchasing power; the other pillar of domestic demand, equipment investment increased 1.0% month-on-month, but the leading indicator “civilian machinery excluding ships and electricity” orders fell 2.1% month-on-month, the first negative growth in four quarters. Private residential investment fell by more than 30% on an annual rate, almost offsetting the results of post-pandemic recovery. The Japanese economy has long-term structural shortcomings, including the declining birthrate and aging, labor shortages, slowing productivity growth, and declining industrial competitiveness and technological innovation capabilities, etc., which weaken the momentum of economic growth. The potential economic growth rate has hovered in the 0.1% to 0.9% range for a long time. The current 21.3 trillion yen stimulus plan is only the initial deployment of the Takaichi Sanae government, and a broader growth strategy has yet to be introduced. However, if its subsequent policies fail to effectively address the deep-seated crux of the economy, and instead continue to rely on fiscal expansion and the implementation of a security priority logic, not only will it not help Japan's economy recover, but it will also plunge it into a more complicated development situation.

Currently, the Japanese economy is once again turning red and is on the verge of recession. In the third quarter of 2025, Japan's real gross domestic product fell 1.8% at an annualized rate, the first negative increase in six quarters. Affected by the US tariff policy, Japan's exports to the US fell 3.1% year on year in October, shrinking for 7 consecutive months. Exports of goods and services trade fell 1.2% month-on-month in the third quarter, and the contribution of external demand to economic growth changed from positive to negative. At the same time, domestic demand is also difficult to form effective support. Personal consumption, which accounts for more than half of the Japanese economy, increased slightly by 0.1% month-on-month, and prices continued to increase people's living burdens and suppress purchasing power; the other pillar of domestic demand, equipment investment increased 1.0% month-on-month, but the leading indicator “civilian machinery excluding ships and electricity” orders fell 2.1% month-on-month, the first negative growth in four quarters. Private residential investment fell by more than 30% on an annual rate, almost offsetting the results of post-pandemic recovery. The Japanese economy has long-term structural shortcomings, including the declining birthrate and aging, labor shortages, slowing productivity growth, and declining industrial competitiveness and technological innovation capabilities, etc., which weaken the momentum of economic growth. The potential economic growth rate has hovered in the 0.1% to 0.9% range for a long time. The current 21.3 trillion yen stimulus plan is only the initial deployment of the Takaichi Sanae government, and a broader growth strategy has yet to be introduced. However, if its subsequent policies fail to effectively address the deep-seated crux of the economy, and instead continue to rely on fiscal expansion and the implementation of a security priority logic, not only will it not help Japan's economy recover, but it will also plunge it into a more complicated development situation.