<h1>Japan's Economy Grows at 2.2% Annual Rate; Consumer Spending Drops, Exports Rise; Bank Faces Policy Challenges</h1> Japan's economy grew at a 2.2% annual rate in the last quarter of the year, revised down from 2.8%, due to reduced consumer spending and higher private inventories. Despite this, the economy experienced its third consecutive quarter of expansion, with a 0.6% increase in seasonally adjusted real GDP. Private demand fell by 0.3%, while exports grew by 1.0%. Japan's persistent deflation challenges growth, although recent wage increases have mitigated some effects. The Bank of Japan faces complexities in policymaking, particularly concerning interest rates, amid uncertainties about US economic policies and potential tariffs impacting Japanese exports.