Around 80% of first-quarter earnings announcements are now in, with ordinary profit up approximately 25% year on year. A combination of factors, including the weaker yen, higher interest rates, rising wages and demand from foreign visitors, has supported generally strong contributions from both domestic demand and exports.
Around 80% of first-quarter earnings announcements are now in, with ordinary profit up approximately 25% year on year. The contribution ratio of export-related and domestic-demand-related companies is estimated at approximately 60% from exports and 40% from domestic demand, with strong performance continuing across industries.
A weaker yen is a positive factor for exporters, although the impact of imported resources must also be considered. The scale of domestic demand, however, is generating a positive effect relative to the size of global markets. Another factor supporting domestic demand is the expansion of financial institutions’ profits resulting from higher interest rates.
Rising wages are a tailwind for the working-age population, with average increases of approximately 3%, while occupations facing labor shortages have seen increases of around 5–10% annually. Strong demand from foreign visitors has also been observed, and the spillover effects of the spread of AI, along with increased M&A and business succession activity, are thought to be creating a new phase in corporate management.
Many observers believe that the Japanese economy is doing reasonably well, and the trend is considered likely to continue for the time being. Some have also pointed to the possibility that Japan could emerge as one of the global winners.