MNI: Japan Govt Keeps Economic View, Cuts O’seas Economies

Japan’s government left its overall economic assessment unchanged for a fifth straight month but downgraded its view on overseas economies for the first time since May 2025, the Cabinet Office said Thursday.

The government said overseas economies are continuing to recover moderately, but weakness is emerging in some regions amid persistent uncertainty surrounding U.S. tariff hikes. The previous assessment had described conditions as broadly at a standstill in some regions.

It also revised its view on the trade balance for the first time since October 2021, saying it is now broadly flat, compared with a previous assessment that described the balance as in deficit.

Assessments of other components – including exports, capital investment, production and private consumption –  were left unchanged.

The Cabinet Office maintained that Japan’s economy is recovering at a moderate pace, though the impact of U.S. trade policy is being felt mainly in the automobile industry.

Looking ahead, the government said improvements in employment and income conditions, along with the effects of policy measures, are expected to support the recovery. 

However, it warned that downside risks remain, citing price developments, uncertainty over U.S. trade policy, and volatility in financial and capital markets.

The government also downgraded its assessment of China’s economy for the first time since July 2024, saying it is slowing moderately, compared with a previous view that conditions were flat. 

A Cabinet Office official cautioned that a slowdown in China could weigh on Japanese exports.