BOJ Economic Assessment: Updated Oct. 12, 2025.

BOJ retains economic assessments of 8 regions, but cuts view on Hokkaido

Article source: https://mainichi.jp/english/articles/20251006/p2g/00m/0bu/043000c

Ideas

Not every province or region in Japan is going to be up as some might be down due to differences in economic activity in each region. 

The major metro regions of Tokyo, Osaka, and Nagoya, of course have the most economic activity but some regions or province, might actually be on some kind of life-support, meaning economic activity in those regions have been and less and the populations in the smaller provinces might keep decreasing.

The Bank of Japan doesn't want to say anything really negative about any province or region as they don't want to influence businesses or investments from not going to those regions.

So they use phrases as a "recovering moderately" or "picking up" or "picking up moderately to smooth out anything negative, when if reality some or the more rural provinces or regions, for a long time, have been struggling mostly due to a population decrease as citizens the rural provinces have been moving to the larger metro areas to find jobs.

Manufacturing in Japan, by both small, medium, and large companies are in most of the provinces in Japan but some of the small and mid-size companies might actually be just barely hanging on as the cost of raw materials keeps increasing along with some companies having challenges actually finding workers due to the fact they can't afford to pay the wages needed to attract new workers.

And yes, the tariff situation might actually be affecting many of the manufacturing companies in Japan and especially the small and mid-size companies that don't have a lot of resources to either overcome the tariffs and or outlast the tariff situation, which many of the large Japanese companies can do.

In the larger province with the larger metro areas, companies are probably doing somewhat OK but its the smaller provinces that companies might be having a lot of challenges as maybe they don't even have the capital to innovate or improve their situations as again, they might keep losing workers due to the fact workers, now days in Japan are able to look for better wages and they are moving to the metro areas for better jobs.

Many companies don't have a choice as maybe their profit margins are already stretched thin due to increased raw material costs and then add in the increase in wage increases which has caused many companies to have very thin margins and then add in the tariff situation and companies have no choice but to pass-on the tariffs to the next in the supply chain.

Even Japanese company domestic customers might be feeling the affects to the tariff situation as again, companies might have been stress out due to increase material costs, increased energy costs, and then add in the wage increase situation so any Japanese companies that has both domestic customers and US customers already have thin profits margins and so companies might be spreading out the tariff costs to all customers in the supply chain both domestic and US chains.

Its only natural as prices increase demand for products decrease as its just supply and demand, and unfortunately there is always going to be some customers or consumers who look for bargains, look for substitutes and or decrease their spending where they can.

Restaurants, being service type companies, have very thin profit margins and usually have no choice but to increase prices and they usually can't absorb the material price increases like large companies can.

And supermarkets are probably in the same situation as they too usually have very thin margins and can't afford to absorb any costs the incur and they are usually some of the quickest to pass-on their costs the the customer.

There could be many reasons for the decrease in spending by foreign tourists in the Hokkaido area such as increased airline prices, and change in the tourism tax situation, the change in the new visa system in Japan, and of course even the change in foreign spending habits which could affect spending in Hokkaido.

And then there is the idea that Hokkaido is a relatively far off-place from the Tokyo metro area or even the Osaka metro which includes. Kobe, Nagoya, and Kyoto.

The bulk of foreign tourists probably don't want to go to Hokkaido but want to go to either the Tokyo area or the Osaka area for the trip to Japan.

Have a nice day!