Tokyo – The Bank of Japan released its quarterly Tankan survey on Thursday, showing a continued upswing in business confidence across the nation. Large manufacturers reported a sentiment index of 24, up from 22 in the previous quarter, extending a six‑quarter streak of improvement.
Mixed Signals from Non‑Manufacturers
While manufacturers saw gains, the sentiment among large non‑manufacturing firms slipped to 35 from 37. The survey measures the balance of firms expecting favorable conditions against those feeling pessimistic, and the overall index remains positive for the sixth straight quarter.
External Pressures Remain
Japan’s economic outlook is still challenged by higher global oil prices. The war in Iran has effectively closed the Strait of Hormuz, limiting Japan’s traditional oil supply routes. Brent crude now trades around $98 a barrel, down from a recent peak near $120 but still well above the sub‑$70 levels seen before the conflict.
Domestically, the Bank of Japan raised its benchmark interest rate twice this year – in June and September – to 1.25%, a three‑decade high. The central bank cited a weakening yen and rising import costs as reasons for the hikes. Higher rates are intended to support a stronger currency, yet the yen remains relatively weak, trading near 160 per U.S. dollar, up from about 110 yen five years ago.
Long‑Term Structural Issues
Beyond immediate price pressures, Japan faces enduring demographic challenges. An aging population has created labor shortages and raised concerns about future economic vitality. Policymakers continue to grapple with how to sustain growth while addressing these structural headwinds.
Despite these obstacles, the Tankan’s steady improvement suggests that Japanese firms remain cautiously optimistic about the near‑term outlook. The Bank of Japan’s ongoing effort to normalize monetary policy after decades of near‑zero rates appears to be gaining traction, even as the country navigates a complex global environment.
Original reporting: Alexandria, VA News – WTOP News — read the source article.
