BOJ Economic View: Updated Jan. 15, 2026.

BOJ maintains economic views of all 9 regions as US tariff impact eases

Article source: https://mainichi.jp/english/articles/20260109/p2g/00m/0bu/008000c

Ideas

For the most part, the Bank of Japan never says anything too negative as they don't want to upset the financial markets in Japan or globally.

And yes, capital spending in Japan might have remained solid as companies might feel the Japanese economy is finally headed back onto the right track after the US tariff scare and the US tariff situation seemed to have settled down some and maybe companies feel less stress now than they did in April.

And again using the phrases suggested in the article the BOJ doesn't want to paint a picture of gloom and doom so they always try to say something positive for each region of Japan.

And yes, there are some or many weaknesses now and still in the Japanese economy such as  inflation continues to affect not only businesses with higher than normal material costs but also Japanese families with high food costs at supermarkets.

The global economy and many economies around the world are now in a AI race to find the right mix for its economy without causing too many disruptions and its especially true in Japan with its customer centric and customer focused economy, which potentially could be disrupted a lot in the future.

No one knows just yet how everything is going to be in the future and everyone is trying to find out the best mix for businesses and customers and trying not to rely 100 percent on AI while finding ways to use it in a more efficient way.

Yes, the new rates might have taken effect in September there are still tariffs of 15 percent of some products and other tariff rates on other products that companies have to deal with either passing-on the rates to the next in the supply chain including businesses and customers in the US or absorbing the rates which will affect Japanese company profit margins in the future.

Time will only tell if Japanese companies can absorb all of the tariff rates or if they have to eventually try to pass-on the rates to whomever and it be seen if they begin to see a decrease in sales in the future due to an increase in the price of their products in the US.

If the news so far that the impact has been limited that might be an indication that maybe Chinese tourists are not exactly following what the Chinese government is saying as they have implied Chinese tourists should avoid going to Japan. But then again it might not be true as the BOJ always wants to sound positive about all things in Japan.

But with the Chinese New Year holiday season coming up in February that will be when there might be a full impact related to the situation as maybe its just too early to tell what is going to happen with Chinese tourists going to Japan.

Unfortunately, whether good or not so good Japan always seems to take one step forward and 5 steps back related to diplomacy related to other China or South Korea as something always says something that upsets one or both countries and usually its not intentional but it seems to happen every few years.

In this case the new Prime Minister is not experienced enough in international diplomacy and eventually will learn what to say and not say and where to go and not go to make sure that Japan is on level terms with its neighbors.

Wage hikes seem to be the key for the BOJ and its idea that the Japanese economy can improve and grow again.

But the problem with that approach is only about 30 percent of the Japanese workforce work for the large name-brand companies in Japan and up to 70 percent of the workforce works for small and mid-size companies which either don't have the needed resources to give wage increases and or their profits margins are so thin they can't afford wage increases at this time.

So yes, the large companies employees might get the needed wage increases but the small and mid-size company employees might not get much less which in effect its not really going to help the Japanese economy grow or improve that much.

Again, wage growth might happen for the large company employees but for the small and mid-size companies its still a hit and miss situation and it could happen and then again it might not happen or the wage increase for small and mid-size companies is not going to be anywhere near the large company increase which means the disposable income of small and mid-size company employees is still going to be challenged with the high inflation situation in Japan.

Wage negotiations now are on going in Japan as its a little too early to see what is really going to happen as all will be resolved by the beginning of the new fiscal year in April of 2026.

Have a nice day!