Japan's economic outlook: summer 2026 (revised edition)

Research evidence excerpt

Japan's economic outlook: summer 2026 (revised edition)

8 June 2026

Mizuho Securities Equity Research Economics / Domestic and Overseas Economy

Macroeconomic Outlook

Implications for the Japanese and global economy, prices, and monetary policy

Chief Economist: Summary

Shunsuke Kobayashi Ceasefire negotiations continue, but the course of the war against Iran remains

+81 3 6202 8222 fluid. The Iran war is a matter of economic life or death for Japan, which lacks

shunsuke.kobayashi@mizuho-sc.com energy resources and depends on the Middle East for the bulk of its crude oil

procurement. There are two pathways of influence: a reduction in the volumeEconomist:

of energy resource supply, and a rise in energy resource prices. The commonSoichiro Hirose

factor behind both is the duration of the closure of the Strait of Hormuz.+81 3 6202 8293

soichiro.hirose@mizuho-sc.com Japan is dependent on the Strait of Hormuz for 94.3% of its crude oil imports.

We calculate that even if rerouted exports via alternative routes become

operational, Japan would still depend on the Strait of Hormuz for 18.0% of its

total energy supply. Even if alternative resource procurement were secured,

volatility in price increases would remain. An energy price surge equivalent

to $50/bbl in WTI terms would increase Japan’s import costs by ¥16.3t,

depressing real GDP by 0.33% (¥2.0t) and nominal GDP by 1.68% (¥11.4t) in

the first year. Corporate OP would decline by ¥6.7t, and household disposable

income would be squeezed by ¥9.6t.

The Iran war impact on central bank monetary policy decisions is complex.

The US Federal Reserve Board (FRB) targets prices and employment, while

the BoJ targets price stability, specifically stability in the consumer price index