ING Predicts Positive Economic Momentum for Japan in Early 2026

ING economists anticipate that recent data on Japan's economic activity will signal positive momentum in the early months of 2026. According to Jin10, despite the lower-than-expected GDP growth in the fourth quarter of last year, ING forecasts a strong rebound in monthly economic activity data. They expect significant growth in industrial production and retail sales in January, driven by fiscal stimulus and substantial winter bonuses. Meanwhile, Tokyo's consumer inflation, a leading national trend indicator, may slow further due to softer energy, utility, and food prices. ING projects that core inflation, excluding fresh food, will fall below 2%, allowing the Bank of Japan to maintain its current interest rate of 0.75% at its March meeting.