Monthly Economic ReportExecutive Summary( jul 2025 )

(Provisional translation)

(Assessment of the current state of the Japanese economy)

  The Japanese economy is recovering at a moderate pace, while the effects caused from the U.S. trade policies and so on are seen in some areas.

• Private consumption shows movements of picking up with the movement of improvement in the employment and income situation continuing, although the improvement in consumer sentiment is slow.
• Business investment shows movements of picking up.
• Exports are almost flat.
• Industrial production is flat.
• Corporate profits are improving, although attention should be given to the effects of trade issues.
  Firms' judgments on current business conditions have been almost flat.
• The employment situation shows movements of improvement.
• Consumer prices have been rising.

  Concerning short-term prospects, the improvement in the employment and income situation and the effects of the policies are expected to support a moderate recovery, while attention should be given to downturn risks of the Japanese economy due to the impact of the U.S. trade policies are increasing. In addition, the effects of continued price increases on private consumption through a downturn in consumer sentiment are also downside risks to the Japanese economy. Also, continued attention should be given to the effects of fluctuations in the financial and capital markets.

(Policy stance)

  In light of the recent deal between Japan and the United States, the Government will continue to take all possible measures to response U.S. tariff measures, and will continue to ensure the provision of all essential support for economic and fiscal management. Based on the "Basic Policy on Economic and Fiscal Management and Reform 2025: Toward a Society in which People can Feel “Tomorrow will be Better than Today”, the Government will make effort to implement a “Growth-Oriented Economy Driven by Wage Increases and Investments”

  To this end, the Government will promptly implement the “Comprehensive Economic Measures to Foster the Safety and Security of Citizens and Sustained Growth－Increasing Current and Future Wages and Incomes for All Generations－”, the FY2024 supplementary budget, and the FY2025 budget. Moreover, the Government will implement the "Emergency Response Package to U.S. Tariff Measures", which was decided on April 25th.

  The Government and the Bank of Japan will continue to work closely together to conduct flexible policy management in response to economic and price developments.

  The Government expects the Bank to achieve the price stability target of two percent in a sustainable and stable manner, while confirming the virtuous cycle between wages and prices, by conducting appropriate monetary policy management in light of economic activity, prices and financial conditions.