Uncertainty surrounding the economic outlook due to geopolitics, supply shortages and divergent monetary policies

「The economic DI was 44.6 in August 2026, improving for the fourth consecutive month and indicating a recovery in business sentiment. While a gradual economic recovery is expected ahead, supported by improvements in employment and income conditions and the effects of various policies, the situation continues to require attention to the impact of conditions in the Middle East and natural disasters.」

「During the interim accounting period from 1 December 2025 to 31 May 2026, Japan's economic diffusion index (DI) improved to 41.6 in May 2026, marking its first improvement in 3 months. A gradual recovery is expected as employment and income conditions improve and various policy measures take effect, but the impact of the situation in the Middle East and volatility in the financial and capital markets requires continued close monitoring.」

「During the fiscal year from 1 December 2024 to 30 November 2025, Japan's economy maintained a gradual recovery trend. The economic DI was 44.1 in November 2025, marking improvement for the sixth consecutive month. The outlook is for employment and income conditions to improve and various policy measures to support the overall recovery, but continued cautious monitoring is required of downside risks to the domestic economy from US trade policy.」

「During the interim accounting period from 1 December 2024 to 31 May 2025, Japan's economic diffusion index (DI) fell to 42.6 in May 2025, deteriorating for the second consecutive month. This was its lowest level since February 2023, near the end of the COVID-19 pandemic. The domestic economy was affected by tariff measures imposed by the US Trump administration, heightening concerns about the outlook, while personal consumption showed sluggish growth and business sentiment deteriorated.」

「A continued gradual recovery is expected as employment and income conditions improve and policy measures take effect, but attention is required regarding the impact on Japan's economy of downturns in overseas economies, including prolonged high interest rates in Europe and the United States and stagnation in China's property market, as well as rising prices, US policy developments, the situation in the Middle East and volatility in financial markets.」

「During the cumulative six-month period from 1 December 2023 to 31 May 2024, personal consumption remained weak as cost burdens increased owing to persistently high raw-material prices caused by yen depreciation. The outlook is for a continued gradual recovery as employment and income conditions are expected to improve, but a downturn in overseas economies caused by the impact of global monetary tightening and other factors poses a downside risk to Japan's economy. The effects of rising prices and volatility in the financial and capital markets require continued close monitoring.」

「The outlook is for a continued gradual recovery as employment and income conditions improve, but downside risks to the economy arising from the impact of global monetary tightening and other factors remain, requiring continued close monitoring.」

「During the fiscal year from 1 December 2022 to 30 November 2023, Japan's economy faced uncertain factors including globally rising prices, the impact of concerns about a downturn in the global economy and continued yen depreciation. However, the reclassification of COVID-19 as a Category 5 infectious disease supported the normalisation of domestic economic activity and the recovery of inbound demand.」

「During the cumulative nine-month period from 1 December 2022 to 31 August 2023, Japan's economy faced uncertain factors including global inflation, downside risks to overseas economies and continued yen depreciation. However, domestic economic activity recovered significantly as the shift from the COVID-19 pandemic to the post-pandemic period began following the reclassification of COVID-19 as a Category 5 infectious disease.」

「Meanwhile, the manufacturing sector's recovery slowed under the impact of global inflation, while economic uncertainty also emerged owing to monetary tightening in Europe, the United States and elsewhere.」

「As in the previous fiscal year, savings-type and investment-type products continued to be the main focus of life insurance sales, in response to needs for asset building, including preparing funds for retirement. The number of new life insurance contracts during the cumulative first quarter was 45,185, while the number of contracts for foreign-currency-denominated products declined amid concerns about a US recession.」

「However, the yen continued to depreciate for an extended period from March 2022 as interest-rate differentials widened owing to the divergence between Japanese and US monetary policies, resulting in market turmoil caused by sharp exchange-rate fluctuations. In addition to the weaker yen, surging raw-material prices due to the impact of Russia's invasion of Ukraine, which began in February 2022, drove the Consumer Price Index to 3.7% in October, its highest level in 40 years. A repeated "price-hike rush" for food and daily necessities continued throughout the year, and the outlook remains uncertain.」

「The outlook for the economy remains uncertain in Japan and overseas, owing to the prolonged Russia-Ukraine conflict, shortages of raw materials, and the rapid depreciation of the yen against the backdrop of widening interest-rate differentials as the divergence between Japanese and US monetary policies became more pronounced.」