Japan to Closely Watch Economic Impact of Mideast Conflict

TOKYO, (UrduPoint / Pakistan Point News / WAM - 25th Jul, 2026) J apan needs to closely watch the impact of the middle East conflict on the country's economy before declaring a complete exit from deflation, a government white paper said Friday, Jiji Press reported.

The Japanese economy remains on a private demand-led recovery track thanks to record corporate profits and favorable employment and income conditions, the government said in its annual report on the economy and public finance.

The government needs to carefully assess the extent to which the Middle East conflict will exert downward pressure on the real economy before declaring an end to deflation, the report said.

The government in 2001 declared that the economy had fallen into deflation after the collapse of asset-driven bubbles.

In recent years, the government has indicated that the country is clearly no longer in deflation in light of rising prices. But it has stopped short of declaring an end to deflation, saying it cannot rule out a potential return to the situation.