Moody's Economist Highlights Challenges for Japan's Economy Amid Global Tensions

Moody's economist Stefan Angrick has expressed concerns over Japan's economic outlook for the last quarter of 2025, despite better-than-expected performance. According to Jin10, Angrick noted that Japan faces several challenges, including U.S. import tariffs and competition from other countries, which are impacting exports and factory output. Additionally, conflicts in the Middle East and trade threats are contributing to the uncertainty. Domestically, weak demand remains a significant challenge as inflation has consistently outpaced nominal wage growth for several years. Policymakers are hoping for a slowdown in inflation to boost real incomes, but weak wage data and rising oil prices pose risks to this scenario. If commodity prices remain high, it could lead to renewed inflation and yen depreciation. Moody's analysis predicts that the Bank of Japan will maintain its current stance in March, with a potential rate hike in the summer.