Economic Overview

— Latest update: March 2026 —

In 2025, Japan’s GDP reached 662 trillion yen, experiencing a real GDP growth of 1.3%.  According to the OECD, growth is projected to moderate to 0.9% per annum over 2026-27.

Domestic demand is expected to be the primary driver of growth, while external demand is projected to weaken with exports to the United States slowing down in response to US tariffs.

Private consumption is expected to be maintained by wage increases, pushing up real disposable income. Furthermore, business investment is expected to be supported by government subsidies and corporate profits. The new fiscal stimulus package, amounting to 17.7 trillion yen, will further support investment and public consumption through subsidies and wage support.

Inflation is projected to slow to approximately 2% in 2026, alongside a tightening of monetary policy. Inflation was primarily driven by increase in food prices and energy. The Bank of Japan (BOJ) is attempting to lower inflation, but the fiscal expansion might push price higher. In December 2025, the BOJ increased its policy rate to 0.75% while the yen continued to weaken over 2025.

The Japanese labor market has remained stable with a relatively low unemployment rate (2.6%) while employment continued to grow. Nevertheless, real wages haven’t increased despite significant nominal increase in 2025, limiting spending power in Japan.

Due to increase global geopolitical uncertainty, Japan economic activity is expected to experience fluctuations and adaptation difficult to forecast.  

OECD, Economic Outlook, Japan, 2025

Government of Japan, Cabinet Office, Economic Statistics, 2025

Deloitte, Japan economic outlook 2026

> For an overview of each of the 47 prefectures of Japan, please see our dedicated Regions and Prefectures page.

Table of contents

• Key Indicators and policy overview
• EU-Japan Trade Statistics
• R&D Expenditures
• Forecasts
• Expert report
• Annual Report
• Further Reading
• Relevant Organisations