Japan Faces Economic Slowdown Amid Growing Trade Disputes

Economic Slowdown Amid Growing Trade Disputes

Japan: Japan’s economic recovery has hit a roadblock following renewed trade tensions, sparked by US-imposed tariffs under the Trump Administration in early April. Prior to this, the Bank of Japan (BoJ) had anticipated export-led growth, driven by a rebound in global demand, especially for IT products. However, during its March meeting, the BoJ paused planned interest rate hikes due to growing global uncertainties. By April, the central bank maintained the policy interest rate at 0.5%, reflecting a more cautious stance.

In response to rising external pressures, the BoJ revised its GDP forecast for fiscal year 2025 from 1.1% down to just 0.5%, pointing to a notable economic slowdown. This shift stems from international policy decisions squeezing corporate profitability. ING Think projects a 0.1% contraction in Japan’s economy for Q1, potentially halting any further BoJ rate hikes. Investors should stay alert as next week’s GDP data will reveal whether Japan’s economy can withstand the impact of these global headwinds.

Source: Finimize