Japan's GDP growth reverses course in the third quarter, ending a two-quarter slide.

• Japan's third-quarter GDP grew 0.3% annually, ending a two-quarter streak of yearly decline.
• While expanding 0.9% on an annualized basis, the GDP rose 0.2% in the third quarter compared to the previous quarter.

Japan's third-quarter GDP grew 0.3% annually, ending a two-quarter streak of yearly decline.

In the second quarter, the GDP reading showed a 1.1% decline, but this was later reversed in the third quarter with a reading of growth.

Since the Bank of Japan raised its rates from 0.1% to 0.25% in July, which is its highest level since 2008, the data has been analyzed.

If economic activity and prices develop as expected, the BOJ will continue to raise rates to cool the economy.

According to Reuters poll estimates, GDP increased by 0.2% on a quarter-on-quarter basis.

Despite a 2.9% increase in the previous quarter, the economy only expanded 0.9% annually, which was below expectations of a 0.7% growth.

If economic indicators align, the BOJ may increase rates to 1% in the second half of its 2025 fiscal year, which begins in September 2025.

Shigeru Ishiba, Japan's prime minister, reportedly stated that he does not believe further raising interest rates is necessary in an environment that is not demanding it, following a meeting with BOJ governor Kazuo Ueda in October.

In contrast to his comments to Reuters in August, where he stated that the BOJ was "on the right policy track" to normalize rates, this was not the case.

After the release of the GDP data, the Nikkei 225 increased by 0.76% and the Topix index gained 0.64%.

The GDP announcement caused the Japanese yen to weaken 0.16% against the U.S. dollar, trading at 156.51.

In the third quarter, the yen experienced significant fluctuations, prompting the finance ministry to issue warnings against excessive speculation and interventions by the BOJ.