Prime Minister Takaichi Projects 3.4% Nominal GDP Growth in 2026, Accelerating Economic Growth with Responsible Fiscal Policy

Prime Minister Takaichi Announces Economic Outlook for 2026

Prime Minister Sanae Takaichi revealed on January 12th that Japan's nominal GDP is expected to grow by 3.4% in 2026. She shared this optimistic forecast during the New Year celebration attended by top business leaders, expressing hopes that "Japan’s economy will move forward strongly, and wealth will be shared broadly across society."

The Prime Minister also mentioned an expected 1.3% increase in real wages, praising companies for their positive wage hike initiatives. With high approval ratings just two and a half months into her term, the Takaichi cabinet is gearing up for a year focused on implementing "responsible fiscal policies" and building a stronger economy.

Details on the “Responsible Fiscal Policy” Approach

Prime Minister Takaichi emphasized that responsible fiscal policy means “boldly investing in key areas while ensuring fiscal sustainability.” This message aims to reassure markets and dispel concerns about Japan’s fiscal health.

In December, the Bank of Japan decided to raise its policy interest rate by 0.25%. This move reflects a positive outlook on corporate wage increases and a response to the yen’s depreciation, which has contributed to rising prices. The government has shown its willingness to support these rate hikes to help combat inflation.

Message from the Finance Minister to Business Leaders

At the New Year’s celebration, Finance Minister Shunichi Suzuki called for “breaking through the ceiling” with record-high economic growth, signaling a strong commitment to boosting Japan’s economy. The government and Bank of Japan are working together to balance inflation control with sustainable growth, aiming to revitalize the economy.

Addressing Global Economic Challenges

Meanwhile, on the evening of January 12th, a G7 finance ministers’ meeting kicked off in Washington, D.C. Discussions are underway about building supply chains that are less dependent on China, especially for rare earth minerals, which China currently dominates. Finance Minister Shunichi Suzuki plans to explain Japan’s position regarding China’s recent restrictions on exports of military and dual-use items to Japan.

China’s tightening of export controls has raised concerns over Japan’s access to critical minerals. Strengthening international cooperation to secure supply chains is now more urgent than ever.