JRI Research Journal;Vol.8 No.7,
Outlook for Japan’s Economy ― Recovery to Continue, but Inflation Threats Persist ―
Kazuki Fujimoto
Summary
Japan’s economy is expected to stay on the path to recovery.
Exports are currently weakening and are expected to bottom out. This is due to an anticipated global economic recovery driven by looser fiscal and monetary policy in many countries.
A recovery in personal consumption is likely to support the economy. Although corporate profits are expected to decline due to U.S. tariff policies, the pressure for wage hikes is strong due to labor shortages and inflation. Companies are expected to continue wage hikes by increasing the labor share.
On the other hand, inflation is expected to slow, mainly due to moderating energy prices. This will ease the financial pressure on households.
However, risks to the Japanese economy include a resurgence of inflation driven by prolonged inflation in food prices and excessive demand-stimulating policies by the new PrimeMinister, SanaeTakaichi.