Japan's current economic expansion is expected to exceed 71 months as of May 2026, potentially setting a new postwar record. Meanwhile, concerns have been raised that stronger inflationary pressure from higher crude oil prices and yen depreciation could prolong a recovery that people do not feel.
While crude oil prices have risen again amid heightened tensions in the Middle East, Japan's economy is recovering moderately despite external risks including higher oil prices, supply concerns and yen depreciation. Domestic demand is supported by a gradual recovery in private consumption and resilient corporate capital investment. Based on the BOJ Tankan survey's assessment indices and industrial production, views have emerged that the economy is currently deteriorating more slowly than expected.
The economic expansion has already exceeded 71 months, and if it continues through July 2026, it could surpass the 73-month period regarded as the longest postwar expansion. Although an official determination will take time, the current situation has brought a new record within view.
The greatest concern surrounding inflationary pressure is the rise in import and corporate prices caused by yen depreciation and high crude oil procurement costs. Government subsidies are keeping consumer prices down, but inflation excluding the effects of policy measures is showing a high rate of increase. Many reports expect the BOJ to raise rates at its next monetary policy meeting, but some views hold that a delayed response would increase the risk of a sharp surge in long-term interest rates.