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2026-05-26 17:41:26
[Japan Maintains Assessment of Moderate Economic Recovery, Wary of Middle East Situation Driving Up Import Prices, Petrochemical Products See Particularly Prominent Increase] ⑴ On Tuesday, the Japanese Cabinet Office released its May monthly economic report, maintaining its basic assessment that "the Japanese economy is recovering at a moderate pace," while reiterating the need to closely monitor the impact of the Middle East conflict, particularly the issue of rising import prices. ⑵ The report expressed particular caution regarding the soaring prices of petrochemical products such as naphtha and benzene. Government data shows that in April, Japan's import prices rose 17.5% year-on-year, while producer prices rose 4.9% year-on-year. ⑶ Compared to the April report, the May report changed its wording on corporate profits from "affected by US trade policies" to "need to pay attention to the impact of the Middle East situation," and also adjusted the domestic producer price index from "moderate increase" to "increase." ⑷ Regarding private consumption, the report maintained its assessment of "showing signs of recovery," with consumption, a major pillar of domestic demand, viewed favorably. Corporate investment also continued the "recovery" assessment from the April report. ⑸ In its assessment of the overseas economy, the report slightly adjusted its wording from "uncertainty is increasing" to "global economic uncertainty persists." The report newly indicates that the government will take all possible measures to minimize the risks posed by the situation in the Middle East. From a transactional psychology perspective, high import prices are being passed on to producer prices, and the inflationary pressures facing the Bank of Japan cannot be ignored.
