BOJ Economic Assessment: Updated July 18, 2025.

BOJ maintains economic assessment of all 9 areas despite US tariffs

Article source:  https://mainichi.jp/english/articles/20250710/p2g/00m/0bu/044000c

Ideas

The Bank of Japan, like most central banks, are very conservative and don't want to make any bold or outlandish statements that might upset the financial markets.

Japan's economy is very complex and has many different areas and sectors and they are not all the same and might grow much differently than the other.

Like most central banks, they like to use the phrase" recovering moderately" as again, not to upset the financial markets and make it look like all is OK.

The challenge, for the most part, is not the idea of a tariff, which in itself might not be that disastrous, but the challenge of planning as companies just don't know what is happening and don't know how to plan for whatever is coming down the road.

If companies knew that there is going to be a 5 or 30 percent tariff, or something like that, then they could plan and do what is needed to maximize sales and profits.

Companies hate uncertainty and now there is a lot of uncertainty on how to move forward in the next quarter or even the next year.

The tariff situation is not just a US vs another country situation but it affect everything globally as logistics networks are being significantly affected everywhere in the world.

A car, for example or even a smartphone might have parts from all over the world and not just from Japan or maybe even Brazil, maybe Indonesia and of course maybe even China.

And of course companies in the US might be increasing prices now to protect themselves from future tariffs and they might or might not actually be seeing any tariffs at this time.

Japanese companies seems to be a little behind in the digitization of their companies and sometimes they tend to move very slow, but when they do move they do move very fast.

The labor shortage situation in Japan has been a long time coming and the Japanese government knew about it but either didn't know what to do about it or couldn't do anything about it.

For example one idea that keeps coming up is improving immigration of foreign labor which might help the labor situation significantly but the powers to be are somewhat reluctant to open the flood gates to large scale immigration as there might be some political pressure not to do it.

And then there is the idea of productivity in Japan, which some economic organizations have suggested Japan has some of the lowest productivity metrics among OECD advanced countries.

Japan, for the most part, has been a people first society and economy and has been very reluctant to do anything that might disrupt the flow of society or company culture.

But as the world changes, Japan continues to fall farther behind, like it's stuck back in the 80's or 90's and hasn't been able to move forward into the 21st century.

Don't expect much from the July 30 meeting as again, the Bank of Japan, like other central banks don't make bold or outrageous statements so expect the BOJ to stick to the normal script of "recovering moderately" and or not much has changed in the tariff situation just yet.

At the same time, for better or worse, the tariff situation might force some Japanese companies to makes some bold changes in how they do things there might be even more movement into digitalization and maybe even some improvement in the foreign labor situation to help the Japanese labor shortage situation.

Have a nice day!