Monthly Economic ReportExecutive Summary( jan 2026 )

(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 are seen mainly in the automotive industry.

• Private consumption shows movements of picking up.
• Business investment is picking up moderately.
• Exports are almost flat.
• Industrial production is flat.
• Corporate profits improvement appears to be pausing, while the effects caused from the U.S. trade policies are seen mainly in the automotive industry.
  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. However, attention should be given to downside risks to the Japanese economy such as price movements and situations in U.S. trade policies. Also, continued attention should be given to the effects of fluctuations in the financial and capital markets.

(Policy stance)

  The Government will strive to build a “Strong Japanese Economy” through the strategic employment of fiscal policies embracing an approach of “responsible and proactive public finances” and based on the principle of “a sound economy is the foundation of fiscal health”.

  The Government will restore strength to the Japanese economy while tackling rising prices and safeguarding people's daily lives. To this end, the Government will promptly implement “Comprehensive Economic Measures to Build a “Strong Japanese Economy”” consisting of three pillars “Securing Everyday Life and Measures to address rising prices”; “Strategic Investments that Enhance Resilience against Potential Crises”; and “Strengthening Defense Capability and Diplomatic Power” and the FY2025 supplementary budget.

  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 of Japan 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.