Global Scans · Japan · Weekly Summary

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WHAT'S NEXT?: The latest sign of weakness in Japan's economy will likely add to mounting skepticism about the prime minister's expansionary policies. His coalition government has just achieved the supermajority it needs to amend the constitution which many are worried that Japan is about to remove the mask of pacificism and convert its "Self-Defense Force" into the military threat it really is.

• [New] Japanese equities are expected to continue receiving support as certain sectors remain linked to the global AI trend in 2026. EMEA
• [New] In Japan, headline and core inflation have been above target for the past couple of quarters, but the underlying trend has been weaker, prompting a forecast for inflation to edge below 2% in late 2026 and then rise back to policymakers' 2% target in 2027. Morgan Stanley
• [New] Global electricity demand from data centers is now forecast by the IEA to double by 2026, reaching more than 1,000 TWh; nearly the annual demand of Japan. JD Supra
• [New] In terms of nation state threats: China's cyber operations focused regionally on targets in Taiwan, Japan, and Hong Kong, especially anything related to semiconductor tech or political intelligence. DeepStrike
• [New] We expect Japan's transportation and logistics output to grow by 1.4% in 2025 and by 0.4% in 2026. atradius
• [New] In a notable contrast, the Bank of Japan (BoJ) is anticipated to hike rates by 25 bps to 0.75%, moving away from its long-standing zero-rate policies amid signs of wage growth and domestic inflationary pressures. FinancialContent
• [New] A significant loosening of fiscal policy could stifle any improvement in Japan's debt-to-growth ratio, posing a risk to its sovereign credit score. Mint
• [New] Prime Minister Sanae Takaichi plans to increase spending as Japan's central bank is considering raising interest rates. Mint
• [New] The combination of higher interest rates and better yields on Japanese government bonds has sparked concern in financial markets as to how it will impact the so-called carry trade. Deutsche Welle
• [New] Japan faces rising long-end bond yields, a weak yen, and doubts about who will absorb sharply increasing JGB supply. investingLive
• [New] Tensions between Beijing and Tokyo escalated last month after Japanese Prime Minister Sanae Takaichi suggested Japan could deploy military forces in the event of a conflict in the Taiwan Strait. https://www.bangkokpost.com
• [New] Analysts warn the BOJ's rate-hike plans and dwindling purchase of government bonds would raise the cost of funding its huge debt pile. / Japan Japan Today
• [New] The BOJ's tightening could strain Japan's export-dependent economy, creating a ripple effect on Asian markets. Ainvest
• [New] The Japanese yen could further consolidate its safe-haven status - supported by political stability and the Bank of Japan's shift in response to higher core inflation - especially if confidence in the dollar erodes further. Allianz Global Investors
• [New] In Japan, pressure to normalise policy continues to grow given heightened inflation risks. Allianz Global Investors
• [New] Japan's economy is projected to grow 1.3% in 2025, up from 1.1%, and buoyed by strong corporate earnings and investment, before slowing to 0.9% in 2026. The Globe and Mail
• [New] The Bank of Japan has signaled it could raise interest rates, in part to address stubborn inflation, continuing a recent shift away from years of ultra-low rates. CNN
• [New] The primary catalyst for the flight disruptions stems from China's condemnation of recent remarks by Japan's Prime Minister. Travel And Tour World
• [New] The supplementary budget approved by Japan's Cabinet last month will boost defence spending to 2% of GDP two years ahead of schedule. chinadailyhk
• [New] Reuters reports, TSMC is expanding production beyond Taiwan, building fabs in the U.S., Japan, and Europe to reduce geopolitical risk. Neural Newscast
• [New] The interplay between the Japanese government's fiscal policy and the BoJ's monetary policy will remain a key area of observation. FinancialContent
• [New] Higher JGB yields will make Japanese sovereign debt more appealing, and the financial sector could see improved profitability. FinancialContent

Last updated: 13 December 2025