Japan has trimmed its economic growth forecast as rising oil prices weigh on domestic demand. This revision reflects concerns about how higher crude prices are affecting the country’s terms of trade, leading to reduced real household income and weaker consumer spending. The Bank of Japan projects consumer price inflation of 2.5% to 3.0% for fiscal year 2026. Some forecasts predict growth as low as 0.5% to 0.8% for the year. Markets are also pricing in crude oil reaching new all-time highs by the end of 2026.
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