Japan reported a strong rebound in exports and an improvement in corporate sentiment, offering fresh signs of resilience in the world’s third‑largest economy even as the International Monetary Fund (IMF) cautioned that significant risks to global growth remain.
Data released on Friday showed that Japan’s outbound shipments rose more than expected, lifted by solid demand for machinery and semiconductors, particularly in key Asian markets. The export growth coming after weak global trade in previous months helped lift the business confidence index for large manufacturers to its highest level in nearly a year, according to the Bank of Japan’s quarterly Tankan survey.
The improvement in business mood was broadly welcomed by economists, who see it as a sign that Japanese companies are starting to benefit from steady global demand for technology and capital goods. “Exports are clearly picking up, and firms are showing greater optimism about future production and orders,” one economist said, noting that improved corporate sentiment could bolster capital spending in coming quarters.
However, the IMF in its World Economic Outlook update issued a sober warning about the global economic landscape, saying that while some major economies have shown unexpected strength, downside risks remain significant. The Washington‑based lender flagged vulnerabilities including slower‑than‑anticipated growth in key emerging markets, elevated debt levels and trade tensions that could yet weigh on demand for Japanese exports.
In its report, the IMF reiterated that global growth was projected to remain below long‑term averages and that uncertainty over central bank policies and geopolitical developments could dampen investment. For Japan, where economic growth has been modest and inflation has struggled to reach the central bank’s 2 percent target, such external risks underscore the fragile nature of the recent upswing in trade and sentiment.
Japan’s trade data also showed that imports climbed, reflecting stronger domestic demand for fuel and intermediate goods, which could help support investment and production. Yet economists cautioned that higher import costs might dampen headline export figures in future months if global commodity prices fluctuate.
The Tankan survey’s forward indicators suggested that companies expect moderate expansion in production and employment, but flagged concerns over rising wage pressures and potential supply chain disruptions. The Bank of Japan has maintained a cautious stance on monetary policy keeping ultra‑loose settings even as other major central banks have moved to tighten, partly out of concern that prematurely withdrawing support could derail nascent domestic demand momentum.
“Business sentiment is improving, but uncertainty remains,” the IMF said in its outlook. “Policymakers should remain vigilant, and structural reforms to boost productivity and potential growth are essential to sustain momentum.”
Investors reacted to the mixed signals, with Japanese government bond yields holding steady and the yen experiencing modest volatility on the news. Analysts said that while the export and confidence data were positive, markets were likely to focus closely on upcoming global economic indicators and central bank policy shifts for clues on broader growth trends.
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