Japan Economy Bears Lasting Scars Even as Middle East Tensions Ease

Tokyo, June 21 (Jiji Press)--While geopolitical risks surrounding the Middle East have eased for now following the U.S.-Iran agreement on a memorandum to end their hostilities, the impact on prices in Japan from crude oil and naphtha the country procured at elevated costs is expected to continue for some time.

Also, normalization of logistics networks is expected to take time, leaving lasting scars on Japan's economy.

Uncertainty has not been eliminated, as developments could still reverse depending on future negotiations between the United States and Iran.

Before the full impact of Middle East tensions emerged, Japan's real gross domestic product in the January-March quarter of 2026 maintained positive growth from the previous quarter, expanding at an annualized rate of 1.8 pct.

However, a de facto closure of the Strait of Hormuz led to a surge in crude oil prices and heightened procurement concerns, rapidly dampening corporate sentiment and consumer confidence.

[Copyright The Jiji Press, Ltd.]