Japan says overall economy recovering, but cuts view on corporate profits
Japan’s economy is moderately recovering, but risks remain from global factors like U.S. policies and higher interest rates.
The government announced Friday that the economy is recovering moderately but flagged risks ahead, including rising interest rates overseas and U.S. trade policies. It downgraded its evaluation of corporate profits for the first time since March 2023, citing a slowing recovery. “The economy is recovering moderately, although it seems to be pausing in parts,” the Cabinet Office stated in its monthly report. Looking ahead, moderate recovery is expected to continue, supported by improving employment and wages. However, the government remains cautious about U.S. policies, with concerns over President-elect Trump’s proposed tariffs on Canadian, Mexican, and Chinese goods, which could disrupt global trade. Additional risks include higher rates in the U.S. and Europe, as well as China’s sluggish real estate market. Private consumption, which drives over half of Japan's economy, is "picking up", underpinned by wage growth. Capital spending is also showing gains, while exports remain flat, the report noted. This comes shortly after the Bank of Japan opted to keep interest rates unchanged on Thursday. #
