This report presents the Cabinet Office's analysis and assessment of Japan's economic conditions and outlook for July 2025.
The report maintains that the economy is "recovering at a moderate pace, although some impacts from U.S. trade policies are observed." While this assessment preserves the basic direction from the previous month, specific reference to external influences from U.S. policies has been added.
Regarding personal consumption, the report notes that recovery remains weak relative to wage and income growth amid continued price increases for everyday items such as food products. In the corporate sector, capital investment shows signs of recovery, while exports continue to move sideways. Employment conditions are improving, but labor shortages have become serious across various sectors.
Looking ahead, improvements in employment and income conditions, along with the effects of various policies, are expected to support moderate recovery. However, attention must be paid to downside risks from the impacts of U.S. trade policies. Additionally, continued price increases that could affect consumer sentiment and personal consumption through psychological factors are viewed as risks that could weigh on Japan's economy.
The influence of fluctuations in financial and capital markets also requires continued attention, with a policy of closely monitoring domestic and international economic developments.
The article concludes that while Japan's economy maintains a moderate recovery trend, vigilance is necessary regarding multiple uncertainty factors including U.S. policy impacts and inflationary risks.