On Thursday, Japan’s government issued a more cautious view on the state of the global economy, reflecting increasing concern over the broad impact of ongoing trade measures from the United States.
In its May economic update, Tokyo’s policymakers highlighted moderating momentum worldwide, noting that economic expansion was faltering in certain regions as a result of persistent trade friction sparked by U.S. tariff policies.
For the first time in almost three years, officials also adopted a less bullish tone on the U.S., describing its pace of growth as slowing. This is in contrast with the April report which indicated that global activity was still on the upswing.
Regarding its own economy, Japan’s official stance remains that domestic output is recovering at a gradual pace, while also pointing to significant headwinds. While robust hiring and increased household earnings are expected to sustain the recovery, risks linked to U.S. tariffs are becoming more pronounced, the report noted.
Policymakers flagged potential setbacks from rising consumer prices, warning these could dent sentiment and spending. Market volatility was identified as another development investors should watch closely.
Additionally, global agencies are also taking note of the deteriorating conditions. The International Monetary Fund (IMF) trimmed its forecast for global expansion, lowering its projection for 2025 growth to 2.8%, blaming the widespread effects of recent U.S. tariff increases.
Though Washington and Beijing reached a short-term pause in their protracted trade dispute, pessimism persists as uncertainty over American trade policy has disrupted supply chains, dampened international demand, and led many businesses to delay capital investment.
