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[Bank of Japan Meeting Minutes: Japan's Economy Recovers Moderately, Middle East Situation Drags Down Exports and Production, Inflation Faces Short-Term Volatility] ⑴ Japan's economy is recovering moderately overall, but some areas are showing weakness. Looking ahead, with overseas economies returning to a growth trajectory, coupled with the gradual strengthening of the virtuous cycle from income to expenditure supported by government economic measures and a loose financial environment, the economy is expected to continue its moderate growth. However, the impact of trade policies in various districts and the tensions in the Middle East require close attention. ⑵ Export trends are largely flat. Global AI-related demand is expected to boost IT and capital goods exports, but the tensions in the Middle East are expected to lead to a decline in automobile exports to the Middle East, and will drag down manufacturing production and trade activities through supply-side bottlenecks and increased uncertainty. Industrial production is expected to remain largely flat in the medium to long term, supported by AI demand and domestic demand, but production adjustments and increased uncertainty in basic raw material industries will exert downward pressure. ⑶ Corporate profits remain generally high, but manufacturing is declining due to tariffs. Corporate fixed investment is showing a moderate growth trend, supported by clearing backlogged orders and labor-saving investments to address labor shortages, but rising oil prices leading to slower corporate profits and rising construction costs will gradually create downward pressure. (4) Private consumption remained resilient against the backdrop of improved employment and income, but was affected by rising prices. Consumption declined slightly month-on-month since February. Consumer confidence has improved significantly recently, reflecting a positive year-on-year return in real wages and a marked decline in expected inflation. Looking ahead, rising employee income and government measures to address price increases will support consumption, but downward pressure from rising energy prices may intensify from the spring of 2026. (5) Employment and income improved moderately, with nominal wages continuing to grow steadily. Regarding prices, tensions in the Middle East led to a significant rise in crude oil prices and a marked increase in copper prices, but food market prices showed a moderate downward trend. The producer price index (PPI) rose by about 2% year-on-year recently, and the service producer price index (PPI) rose by about 2.5% recently. The CPI rose by about 2% year-on-year recently, influenced by factors such as government energy burden reduction measures. In the short term, the CPI may temporarily slow to below 2% year-on-year, but is expected to face upward pressure again due to soaring crude oil prices.