Barclays Expects Bank of Japan to Raise FY2025 Growth Forecast to 0.8%

Key Takeaways

Barclays expects the Bank of Japan (BOJ) to lift its FY2025 real GDP growth forecast from 0.6% to 0.8% in its upcoming quarterly outlook.

The revision is based on strong Q2 GDP data, reduced tariff uncertainty, and resilient business sentiment in the September Tankan survey.

Despite the upgrade, BOJ Governor Kazuo Ueda is expected to maintain a cautious tone, citing downside risks for FY2026.

Barclays: BOJ to Revise Growth Outlook Amid Economic Resilience

According to Jinshi Data, Barclays economist Naohiko Baba said the Bank of Japan will likely revise its real economic growth forecast for fiscal 2025 from 0.6% to 0.8% in its upcoming quarterly outlook report.

Baba attributed the expected upgrade to reduced trade and tariff uncertainty, stronger-than-expected GDP growth in Q2, and continued business confidence reflected in the September Tankan survey.

He noted that Japan’s economy has shown “solid domestic demand and stable corporate investment,” prompting the BOJ to acknowledge modest improvement in its economic projections.

Ueda to Remain Cautious Despite Upward Revision

Despite the potential upgrade, BOJ Governor Kazuo Ueda is likely to stress downside risks, particularly for fiscal 2026, given lingering uncertainty around U.S. tariff policies and their gradual impact on Japan’s exports.

Barclays also expects the Bank of Japan to raise its policy rate in January 2026, continuing its gradual exit from ultra-loose monetary policy amid persistent inflationary pressures and wage growth momentum.