Japan Cuts 2025 Growth Outlook on Tariffs, Inflation Risks

2025-08-08 05:41 By Farida Husna 1 min. read

Japan's government trimmed its fiscal 2025 growth forecast to 0.7% from 1.2%, citing U.S.

tariffs and persistent inflation, the Cabinet Office said Thursday.

The downgrade reflects a weakening global outlook, partly due to President Trump’s tariff measures, including a 15% across-the-board levy on Japanese exports.

Though reduced from a proposed 25%, the tariff is expected to hurt corporate profits.

Uncertainty remains over whether the new tariffs will stack with existing ones, and the U.S.

has yet to deliver on agreed cuts for auto-related goods.

Tokyo also lowered its private consumption growth estimate to 1% from 1.3%, amid inflation now forecast at 2.4%, up from 2%.

For fiscal 2026, growth is projected to rise slightly to 0.9%, driven by domestic demand as wages outpace inflation.

The government still expects a primary budget surplus of JPY 3.6 trillion, though this doesn’t account for potential tax cuts or stimulus under discussion.



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