Monthly Economic ReportExecutive Summary( jul 2026 )
(Provisional translation)
(Assessment of the current state of the Japanese economy)
The Japanese economy is recovering at a moderate pace, while attention should be given to the effects caused from the situation in the Middle East.
- Private consumption shows movements of picking up.
- Business investment is picking up.
- Exports have been showing movements of picking up recently.
- Industrial production is flat.
- Corporate profits show movements of improvement, while attention should be given to the effects caused from the situation in the Middle East.
- The employment situation shows movements of improvement.
- Consumer prices have been rising moderately.
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 continuously to the effects caused from the situation in the Middle East. Also, attention should be given to the effects of fluctuations in the financial and capital markets and so on.
(Policy stance)
Based on the "Basic Policies on Economic and Fiscal Management and Reform 2026" approved by the Cabinet on July 21, the Government will strive to implement both “Strong Japanese Economy” and “fiscal sustainability” in an integrated manner, embracing an approach of “responsible and proactive public finances”. In the near term, the Government will ensure the transition to a growth-oriented economy by not returning to deflation, while responding flexibly to various risks.
In response to the situation in the Middle East, in the near term, the Government has carried out emergency measures to curb dramatic fluctuations in the price of fuel oil and a mitigation measure for electricity and gas price increases. Through alternative procurement of crude oil and the release of oil stockpiles, the Government will work to ensure a stable supply of crude oil when the situation requires it. The Government will also work to ensure a stable supply and the smooth distribution of critical materials. The Government will implement the FY2026 budget and the FY2026 supplementary budget, which was compiled to minimize risks, in an appropriate and flexible manner in response to developments in the situations.
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.