BofA recently raised its growth forecast for Japan’s economy forecasting 1.3% growth in 2025 and 0.7% in 2026. The bank expects this growth to come from stronger domestic demand: steady household spending and continued investment by companies. Even though exports remain weak due to global trade headwinds, internal economic activity seems to provide a solid foundation for growth. With inflation projected to ease slightly and wages improving, many households could feel better off, which may help sustain consumer confidence. In short: Japan seems to be heading into a period of modest but stable growth — not booming, but steady enough to keep the economy moving forward.
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