Japan’s Economy: Slowly Recovering, but Risks Remain

Japan’s economy is slowly recovering, with signs of improvement in industrial production despite potential risks from rising overseas interest rates on global growth, according to the government’s monthly economic report for June. The negative impact of a data-rigging scandal in the auto sector is decreasing, indicating a positive trend in the economy.

Despite a contraction in the January-March period, Japan’s economy is expected to rebound in the current quarter to June. However, rising prices of everyday goods are affecting consumer spending. Private consumption and exports are showing signs of pausing while business investments are increasing, indicating a mixed outlook for domestic demand.

The Japanese government is closely monitoring the yen’s weakness against the U.S. dollar, which could lead to increased import costs of energy and raw materials, affecting inflation. Despite concerns about high interest rates in the United States and Europe, the government raised its outlook on the global economy for the first time since May 2023, stating that overseas economies are showing signs of improvement.