Japan sees moderate recovery led by capital spending despite weak consumption

Japan’s economy is seeing moderate recovery via capex and digital investment while household consumption lags and export growth slows.

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Japan sees moderate recovery led by capital spending despite weak consumption

Japan’s government announced in a monthly economic report that in October 2025 the economy is recovering moderately, driven by strong capital investment in software and digitalisation rather than private consumption. Exports were flat, with shipments to Asia steady but U.S.-bound exports weakening amid tariffs. The number of bankruptcies rose in September due to labour-shortages, though it remains unclear if the trend will persist. The government, under Prime Minister Sanae Takaichi, is preparing a large fiscal stimulus as the Bank of Japan meets to consider interest-rate policy.