In addition to Chris, I added functionality that child categories will only expand if they are in the selected category.

woocommerce-hide-empty-categores.php

<?php
/**
Plugin Name: WooCommerce - Exclude empty categories from widget
Plugin URI: https://chrisk.io/woocommerce-hide-categories-with-no-visible-products-in-the-product-category-widget/
Description: Excludes categories with no visible products from the WooCommerce category list
Version: 0.2
Author: Chris Klosowski
Editor: Randall Kam
Author URI: https://chrisk.io
*/

/**
 * Exclude categories with no visible products from the category list
 *
 * @param  array $category_list_args Array of wp_list_categories parameters
 * @return array                     Addition of exclude if items are not visible
 */

function get_parent_cats ($cat_termid, $found = array()) {
    array_push ($found, $cat_termid);
	$term =get_term_by( 'term_id', $cat_termid, 'product_cat');

	if($term->parent > 0){
		return get_parent_cats($term->parent, $found);
	}
    return $found;
} 
 
function kfg_exclude_categories_from_widget( $category_list_args ) {

	$current_tax = get_query_var( 'product_cat' );
	$term =get_term_by( 'slug', $current_tax, 'product_cat');
	$term_id = $term->term_id;
	
	$parents = get_parent_cats($term_id);
	
	$args = array(
		'hide_empty' => false,
		'hierarchical' => true,
	);

	$product_categories = get_terms( 'product_cat', $args );

	$exclude = array();
	foreach ( $product_categories as $category ) {

		$posts         = get_posts( array( 'post_type' => 'product', 'posts_per_page' => -1, 'product_cat' => $category->slug, 'fields' => 'ids' ) );
		$show_category = false;

		foreach ( $posts as $post ) {

			$product         = new wC_Product( $post );
			$visible_product = $product->is_visible();

			if ( true === $visible_product ) {
				$show_category = true;
				break;
			}

		}

		if ( false === $show_category || ( $category->parent > 0 && !in_array($category->parent,$parents) ) ) {
			$exclude[] = $category->term_id;
		}

	}

	if ( ! empty( $exclude ) ) {
		$category_list_args['exclude'] = implode( ',', $exclude );
		unset( $category_list_args['include'] );
	}

	return $category_list_args;

}
add_filter( 'woocommerce_product_categories_widget_args', 'kfg_exclude_categories_from_widget', 10, 1 );