An Expected Economic Boost in Japan in Early 2026, According to ING

MidnightTrader · 2026-02-28T09:07:56+00:00

ING economists report unexpected momentum in Japan's economy in early 2026, contrasting with disappointing results from late 2025. Positive activity indicators suggest a significant rebound in January, supported by fiscal measures and winter bonuses. Meanwhile, Tokyo's consumer inflation is expected to slow, allowing the Bank of Japan to maintain interest rates at 0.75% to foster this emerging economic growth.

MidnightTrader

2026-02-28 09:07:56

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ING economists observe an unexpected momentum in the Japanese economy in the first months of 2026. This surge, contrasting with the disappointing results of Q4 2025, is based on encouraging signals in monthly activity data. According to analyses reported by Jin10, this momentum should create conditions for an economic revitalization around January.

Expected Economic Activity Rebound in January

Economic activity indicators are expected to show a strong increase in January 2026. Industrial production and retail sales are particularly targeted by ING’s optimistic forecasts, supported by a range of favorable factors. Fiscal measures and substantial winter bonuses inject significant purchasing power into the economy, creating the conditions for this momentum to be reflected in monthly figures.

Gradual Deceleration of Inflation in Tokyo

Consumer inflation in Tokyo, a key indicator of the national trend, is expected to continue slowing down. The decline in energy prices, utility costs, and food products is a major moderating factor. This deflationary trajectory, combined with weakening underlying inflation pressures, should allow core inflation—excluding fresh food—to stay below 2%.

Bank of Japan Maintains Interest Rate Trajectory

In this context, the Bank of Japan has room to maneuver at its monetary policy meeting scheduled for March. ING economists anticipate that the institution will keep its current key interest rate at 0.75%. This monetary stability aligns with the sustained moderation of inflation and allows the central bank to support this emerging economic momentum without fueling inflationary pressures.

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