# Japan: Navigating Growth and Stability in the Face of Global Uncertainty

- Link: https://www.thailand-business-news.com/finance/256446-japan-navigating-growth-and-stability-in-the-face-of-global-uncertainty
- Published: 2025-11-08T14:15:24+07:00
- Author: Fujiko Takahashi

**Japan’s economy is transitioning to higher interest rates with domestic demand
driven by private consumption and investment. AMRO suggests careful policy calibration
for growth, stability, and fiscal sustainability.**

## Japan’s Economic Transition

Japan is adjusting to a “new normal” with higher interest rates and evolving growth
dynamics. Domestic demand, driven by private consumption and investment, is crucial
amid uncertain international conditions. Achieving growth while ensuring financial
stability requires well-planned policies. Following its Annual Consultation Visit
to Japan, the ASEAN+3 Macroeconomic Research Office (AMRO) highlighted these dynamics.
Led by Lead Economist Runchana Pongsaparn, AMRO’s delegation discussed with Japanese
financial leaders, including the Minister of Finance and the Bank of Japan Governor,
about policy strategies to maintain momentum.

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### Economic Outlook and Challenges

After a slow start, Japan’s economy gained traction in mid-2025 due to increased
consumption and exports. Dr. Pongsaparn projected a GDP growth of 1.0% for 2025,
slowing to 0.6% in 2026 due to tariff impacts. Despite easing food-related shocks,
inflation remains persistent, with core CPI at 2.9% as of September 2025, expected
to decrease gradually. Japan’s external position remains robust, with a current 
account surplus bolstered by strong overseas income. Fiscal improvements are noted,
with the deficit decreasing due to revenue growth and spending adjustments.

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### AMRO’s Recommendations for Japan

AMRO emphasizes a balanced policy approach to support Japan’s transition. The BOJ’s
measured monetary policy should be data-driven, balancing inflation and growth. 
Fiscal policy must be agile to support vulnerable groups and address long-term challenges
like aging and climate change. Additionally, monitoring property market trends is
advised to prevent financial instability. Structural reforms to enhance productivity,
innovation, and digital transformation are crucial for sustaining growth. AMRO appreciates
Japan’s cooperation during consultations, underscoring the importance of ongoing
dialogue for regional stability.

Source: [Japan: Sustaining Growth and Stability Amid External Uncertainty – ASEAN+3 Macroeconomic Research Office ](https://amro-asia.org/japan-sustaining-growth-and-stability-amid-external-uncertainty)