Japan cut its growth forecast for the current fiscal year as U.S. tariffs and persistent inflation weigh on the economy, complicating the policy course of the Bank of Japan and adding to pressure on embattled Prime Minister Shigeru Ishiba.
The government revised its real growth projection for fiscal year 2025 to 0.7%, down from the previous forecast of 1.2%, the Cabinet Office said Thursday. The downgrade partly reflects a darkening global economic outlook as a result of U.S. President Donald Trump’s tariff policies, it said.
Trump has imposed tariffs on countries around the world, including a 15% across-the board levy on Japanese exports to the U.S. While that’s down from the originally proposed 25%, it is still expected to drag on corporate profits. The U.S. has also yet to implement agreed tariff cuts on vehicles and auto parts, which are key exports for Japan.
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