BNP Paribas economists say Japan will likely face continued inflationary
pressure as import prices are expected to remain above pre–Middle East-crisis
levels. Although Strait of Hormuz tensions have eased, a shift to higher-cost
U.S. crude, sharply higher insurance premiums and a weak yen are expected to
keep import costs elevated; an AI investment boom and a strong equity market
should sustain domestic demand, and aggregate demand may remain robust in H2 as
geopolitical uncertainty recedes.
