BNP Paribas strategists lower Japan’s 2026 GDP growth outlook amid inflation and energy cost pressures despite fiscal support.
Bank of Japan tightening measures have not strengthened the yen against the US dollar, even as BNP Paribas strategists revise Japan’s GDP growth forecast downward. Growth is expected to slow to 0.8% in 2026 from 1.1% in 2025, driven by higher inflation and energy-related costs.
The downgrade reflects persistent economic headwinds, though fiscal support and AI-driven productivity gains may partially offset the slowdown. The 2025 forecast of 1.1% was already below long-term trends, signaling prolonged weakness in domestic activity.
The yen’s underperformance persists despite monetary policy shifts, highlighting structural challenges in Japan’s economy.