Japan’s economy experienced a smaller-than-expected contraction of 0.4% quarter-on-quarter in the third quarter (Q3) of 2025, according to the preliminary data released by Japan’s Cabinet Office on Monday. This figure surpassed market forecasts for a 0.6% decline, and follows a revised 0.6% expansion (originally 0.5%) in the previous quarter.
On an annualized basis, Japan’s Gross Domestic Product (GDP) decreased by 1.8% in Q3. While this represents a significant shift from the previous quarter’s revised 2.3% growth (originally 2.2%), it was still stronger than the anticipated 2.5% contraction.
Japan Quarterly Preliminary GDP Overview
The Cabinet Office in Japan was scheduled to release its Q3 data at 23:50 GMT. Expectations were for a 0.6% QoQ GDP contraction, a stark contrast to the prior quarter’s 0.5% expansion. Annually, Japan’s GDP was projected to fall by 2.5%, following a 2.2% increase previously.
Gross Domestic Product serves as a comprehensive measure of the total value of all goods and services produced within Japan during a specific period and is considered the primary indicator of the country’s economic activity.
How Could Japan’s Quarterly Preliminary GDP Impact USD/JPY?
Leading up to the release of Japan’s preliminary quarterly GDP data, the USD/JPY pair remained largely flat. Traders were assessing the likelihood of a December rate cut by the US Federal Reserve (Fed), which contributed to the pair’s stability.
Should the GDP data prove better than expected, it could strengthen the Japanese Yen (JPY). In this scenario, the immediate resistance for USD/JPY would be the November 13th high of 155.02. Further upward barriers are identified at the February 3rd high of 155.88, followed by the January 23rd high of 156.75.
Conversely, if the pair were to decline, the November 10th low of 153.41 would provide initial support for buyers. A more significant drop could lead to a test of the November 7th low at 152.82, with the subsequent support level found at the October 29th low of 151.54.
