This report presents economic conditions across Japan's nine regions from the July 2025 Branch Managers Meeting, including the impact of various countries' trade policies on regional economies.
Key Points
1. Overall Economic Assessment for Nine Regions
- All regions assessed as "recovering moderately," "picking up," or "picking up moderately"
- All nine regions maintained their overall assessments compared to the April 2025 meeting
- Five regions (Hokkaido, Hokuriku, Kanto-Koshinetsu, Kinki, Kyushu-Okinawa) noted "some weak movements"
- Tokai region showed the strongest assessment with "recovering moderately"
2. Impact of Trade Policies on Investment and Pricing
- Rising uncertainty leading to postponement or review of investment decisions
- IT-related capacity expansion investments maintain positive stance based on demand growth expectations
- Products with competitive advantages progressing with tariff pass-through in overseas markets
- Many companies negotiating tariff pass-through with overseas customers for other products
3. Impact on Exports/Production and Future Concerns
- Reports of rush demand and subsequent reaction in anticipation of tariff increases
- Decline in capital goods orders due to more conservative U.S. investment stance
- Overall impact remains limited at present according to most reports
- Future concerns include sales price increases in the U.S. and demand decline from global economic slowdown
4. Wage Setting and Employment Conditions
- High-level wage increases implemented across wide range of industries and company sizes
- Nationwide continuation of wage increases for talent retention and acquisition
- Some companies indicate possible winter bonus reductions if earnings decline due to trade policy impacts
- Companies with severe labor shortages recognize need for continued wage increases next year
5. Polarization in Personal Consumption
- Luxury goods sales at urban department stores remain strong despite weak duty-free sales, supported by domestic wealthy consumers
- Tourism, accommodation, and dining services consumption remains robust
- Daily consumption shows strong frugality trend due to rising food prices like rice
- Event-related consumption remains strong, continuing the trend of selective spending
The article shows that while regional economies maintain overall recovery trends, uncertainty from trade policies is beginning to affect corporate investment decisions and pricing strategies.