• Big-Picture Snapshot
• Foundational Indicators
• Chart Dynamics
• Forward Outlook
• Closing Thoughts

Japan’s real GDP was unchanged at 0.00% quarter-on-quarter in January, according to official data released February 16, 2026[1]. This marks a pause after two consecutive quarters of contraction, with December’s reading at -0.30% and November at -0.20%. The latest figure lags behind the consensus estimate of 0.10%. Compared to the 12-month average of -0.06%, January’s print reflects a modest stabilization but not a return to growth.

Drivers this month

• Private consumption: 0.02pp
• Exports: -0.01pp
• Business investment: flat

Policy pulse

The Bank of Japan’s inflation target remains at 2%. With GDP growth stalling, policymakers face a delicate balance between supporting recovery and monitoring price stability.

Market lens

Japanese equities opened flat, while the yen showed little movement against the dollar. Investors appeared cautious, digesting the lack of growth momentum and the implications for monetary policy.

Japan’s GDP trajectory over the past year has been volatile. January’s 0.00% follows December’s -0.30% and November’s -0.20%. Looking further back, August and September both posted 0.30% growth, while June saw a sharp -0.80% contraction. The annualized growth rate remains below the pre-pandemic trend, with the last positive reading before January recorded in September.

Drivers this month

• Household spending: marginal uptick
• Net exports: slight drag
• Government spending: neutral

Policy pulse

The GDP print remains below the Bank of Japan’s implicit growth target, underscoring persistent economic slack.

Market lens

Bond yields held steady as investors weighed the flat GDP against subdued inflation. The muted response reflects ongoing uncertainty about the strength of Japan’s recovery.

Upside, base, and downside scenarios remain finely balanced. A bullish case—15% probability—would require a sharp rebound in private consumption and exports, pushing quarterly growth above 0.30%. The base case, at 60%, sees continued stagnation or marginal growth, with GDP fluctuating between -0.20% and 0.20% in coming months. A bearish scenario, 25% probability, involves renewed contraction if global demand weakens or domestic spending falters.

Drivers this month

• External demand: subdued
• Inventory changes: minor positive
• Public investment: unchanged

Policy pulse

With growth stalling, the Bank of Japan is likely to maintain its current stance, monitoring both inflation and output gaps.

Market lens

Currency markets showed muted volatility post-release. The yen’s stability reflects a wait-and-see approach among traders, with no immediate catalyst from the GDP data.

Japan’s flat GDP print in January underscores the fragility of its recovery. The economy has yet to regain consistent momentum, with growth alternating between mild expansions and contractions over the past year. Risks remain tilted toward stagnation, though the halt in contraction offers a tentative sign of stabilization.

Drivers this month

• Consumption: slight improvement
• Exports: minor headwind
• Capital formation: steady

Policy pulse

The GDP outcome keeps Japan’s growth trajectory below target, reinforcing the need for continued policy vigilance.

Market lens

Equity and bond markets responded with caution, reflecting the uncertain outlook. Investors remain focused on upcoming data for clearer direction.

Frequently Asked Questions

What does Japan’s latest GDP QoQ reading indicate?

The 0.00% GDP QoQ figure for January signals a halt in contraction, but no clear return to growth.

How does this GDP result compare to recent months?

January’s flat reading follows December’s -0.30% and November’s -0.20%, marking the first non-negative print since September.

What is the focus keyword for this report?

Gross Domestic Product QoQ