Japan’s government maintained a cautious economic outlook, citing potential global impacts of U.S. President Donald Trump’s policies. The Cabinet Office highlighted financial market fluctuations and Trump’s proposed tariffs as key risks to global growth.
Despite these uncertainties, the Japanese economy is recovering moderately, supported by steady wage gains and strong corporate performance. Private consumption is "picking up," and corporate profits are "recovering overall," according to the government’s monthly report.
Japan’s base salaries rose at the fastest pace since 1992 in November, driven by agreements in spring wage negotiations. Wage talks between Keidanren, Japan’s largest business lobby, and trade unions are ongoing, with policymakers watching closely to see if the momentum extends to smaller firms.
The report also noted Japan’s increasing investment in the U.S., where Japanese firms lead in job creation within the manufacturing sector.
This report was presented ahead of tomorrow's announcement of the results of the Bank of Japan meeting. The Bank of Japan is likely to raise interest rates barring any Trump-induced market shocks and maintain a pledge to keep pushing up borrowing costs if the economy continues to recover.