Japan expects that economic growth will accelerate next year through fiscal stimulus measures.

The Japanese government has raised its economic forecast for the fiscal year ending in March next year, and expects the economic growth rate to accelerate next year. The Japanese government believes that its large-scale economic stimulus plan will drive consumer and capital spending growth. This economic forecast is the first version released since Prime Minister Sanae Takamichi took office. The Takamichi government has announced a large spending plan aimed at mitigating the impact of rising living costs on families, while also promoting investment in growth areas. According to the latest forecast approved by the Cabinet on Wednesday, the Japanese government expects the economic growth rate for this fiscal year to reach 1.1%, up from the previous forecast of 0.7% in August, mainly due to the negative impact of US tariffs being lower than expected. The forecast report shows that the Japanese economy is expected to accelerate to 1.3% in the fiscal year 2026, as strong consumer and capital spending counteract the drag from weak overseas demand. The Japanese government stated that supported by tax relief policies and a slowdown in inflation, household spending will receive strong protection, with the expected consumption growth rate for the next fiscal year reaching 1.3%, unchanged from the forecast for the fiscal year 2025. Capital spending in the fiscal year 2026 is expected to increase by 2.8%, higher than the estimated growth rate of 1.9% for this fiscal year. Part of the reason for this growth trend is that the Japanese government's subsidies and tax relief policies are driving companies to increase their investment in crisis management and growth areas.