Stagnant growth and inflation hovering at the edge question Japan's economic policy. According to selected sources, Japan's second-quarter growth reached only 0.3% quarterly and 1.1% annually, with exports serving as the primary driver of expansion. However, a weaker yen has limited the contribution of exports, while weak domestic demand and heavy capital investment have weighed heavily on the economy.

Economic data have begun to reflect the impact of the Middle East conflict, with inflation rising from 1.4% in April to 1.7% in June, projected at 1.9% in July. This combination of weaker growth and rising inflation complicates Japan's economic policy path. The Bank of Japan intends to increase interest rates due to inflationary pressures, while Tokyo favors further fiscal expansion in response to growth stagnation.

According to analysis by Sadi Kaymaz, the approval rate of PM Sanae Takaichi and the cost of living must be considered when predicting what might happen in the future. Kaymaz stated that despite quarterly data not yet pointing to a recession risk, Japanese inflation is generally of an offer-side nature, making weak demand a secondary factor. Inflationary inflation continues in raw material and intermediate goods imports, while wages continue to rise.

The company stated that wages continue to rise and real is a key condition to ensure healthy and sustainable inflation, adding that it is too early to discuss recession or disinflation risk. AI and semiconductor development represent a strong sector with a vibrant investment environment. If there is an abrupt collapse or freeze in AI investments, the risk of recession could increase.

Kaymaz added that quarterly data do not yet indicate a recession risk, but the investment environment remains vibrant. The main challenge now is to balance the need to contain inflation with the need to stimulate growth, a delicate balance that requires careful geopolitical reading of Asian markets and global dynamics.