Japan’s economy continues to recover gradually across the country, according to the latest Regional Economic Report from the BoJ. The central bank maintained its assessment for all nine regions, noting that activity is either picking up or recovering at a modest pace.
The report highlighted continued wage pressure, with many firms indicating the need to raise wages in fiscal 2026 at roughly the same pace as in 2025. Strong corporate profits and a tight labour market were cited as key drivers. That said, the BoJ flagged emerging divergence beneath the surface. Some regions warned that smaller firms may struggle to match last year’s wage hikes.
Some export-oriented areas reported softness linked to “the impact of U.S. tariffs and intensifying competition from Asian companies”. Others, however, pointed to “increasing global demand mainly for artificial intelligence-related goods.”
