Aluminium influence and overall commodity consumption cushion Japan’s Q1 GDP, shrinkage is lower than feared
Japan’s economic engine, though sputtering, is not stalling just yet. Revised data from the Cabinet Office show that Japan’s GDP shrank by only 0.2 per cent annualised in Q1 2025, sharply better than the earlier estimate of 0.7 per cent, and just enough to keep recessionary panic at bay. The improvement was primarily driven by a surprise uptick in private consumption, which accounts for over half the nation’s GDP. From restaurants to gaming, updated spending data lifted consumption growth to 0.1 per cent, reversing the earlier flat-line reading.
What’s more, domestic demand contributed 0.8 percentage point to growth, effectively offsetting the 0.8 percentage point drag from net exports. However, the modest rebound is unlikely to shift the Bank of Japan’s cautious stance, especially as tariff pressures from the US loom large. While inventories and capital expenditure offered some cushion, Japan’s forward momentum remains hostage to export dynamics—and, by extension, to aluminium-intensive sectors under direct tariff fire.
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