Japan's slow economic expansion nearly stalled in the fourth quarter, again raising challenges for the ruling Liberal Democratic Party and the Bank of Japan.

The nation's gross domestic product (GDP) in the fourth quarter expanded by a real 0.1% from a year earlier, undercut by soft exports and public investment, reported the Cabinet Office on Monday.

By another metric, the nation's GDP in the fourth quarter was expanding at a real, but still modest 0.2% annual rate, added the government agency.

Despite the muted result, the fourth quarter was a rebound from the third period, when the nation's GDP contracted at a 0.7% annual rate.

For the full year 2025, Japan's GDP expanded by a real 1.1% on year, after a 0.2% on-year decline in 2024, according to officials.

The nation's Liberal Democratic Party won a "landslide" victory at the polls earlier this month, led by Prime Minister Sanae Takaichi, who has vowed heavier government spending.

The Bank of Japan has also been watching economic reports closely, as it attempts to cool inflation while leaving the modest economic expansion intact.

Japan's central bankers have reiterated plans to keep demand strong enough that real wages rise, thus spurring consumer spending and overall economic growth.

But Japan's inflation rate, as measured by the consumer price index (CPI)-core, that strips out fresh foods, logged at 2.4% on year in December, still above the Bank of Japan's 2% annual target, although cooling from 3% rate in November.

The Bank of Japan's next policy session is in mid-March, when it will review its 0.75% key policy interest rate.