Japan’s capital spending rose 6.4% in early 2025, reflecting strong domestic demand

In early 2025, Japan’s capital spending increased by 6.4%, significantly higher than the expected 3.8%. This reflects a resilient domestic demand and confidence in corporate growth, alongside corporate sales and profits rising by 4.3% and 3.8%, respectively.

Despite robust domestic investment, Japanese exporters are anxious about rising US tariffs, particularly affecting steel and automotive sectors. Prime Minister Shigeru Ishiba is considering diplomatic efforts to address these tariff challenges while promoting an increase in corporate investment towards innovation.