BOJ Outlook Report (April 2026): oil prices slow growth, push inflation upHow the Bank of Japan sees the economy ahead (April 2026)
On April 28, 2026, the Bank of Japan published the Bank's view in its Outlook for Economic Activity and Prices (April 2026), decided at the Monetary Policy Meeting held on April 27 and 28. Higher oil prices stemming from the Middle East situation will weigh on corporate profits and households' real incomes, so growth is expected to slow in fiscal 2026, though moderate growth continues. Year-on-year CPI (all items less fresh food) is projected at the high-2% range for fiscal 2026.
- Fiscal 2026High-2% range
- Fiscal 2027Low-2% range
- Fiscal 2028About 2%
Key points
- In fiscal 2026 the worsening terms of trade from higher oil prices weigh on growth, which slows; high corporate profits, government measures and accommodative financial conditions provide support, so moderate growth continues. From fiscal 2027 growth is projected to rise gradually
- Year-on-year CPI (all items less fresh food) is projected at the high-2% range in fiscal 2026, the low-2% range in fiscal 2027 and about 2% in fiscal 2028
- The projections assume Dubai crude starting at about 105 dollars a barrel and falling to the 70-dollar range toward the end of the projection period
- Compared with the previous projections, growth for fiscal 2026 is lower and CPI for fiscal 2026 is substantially higher. Centered on fiscal 2026, downside risks to the economy and upside risks to prices are greater
What to do in practice
- Taking the surge in energy and materials costs as a premise, check whether pricing and cash-flow plans need revisiting
- Developments in the Middle East could change the outlook greatly, so check in later Outlook Reports whether the assumptions have changed
In the Outlook Report it published on April 28, 2026, the Bank of Japan says that the large rise in crude oil, the raw material for gasoline and electricity, caused by the Middle East situation will weigh on this fiscal year's economy. So it expects growth to slow, though not to stop. It expects prices to rise sharply this fiscal year.
- (1) Pricier oilThe Middle East situation pushes up the price of crude oil
- (2) Heavier burdenCompany profits and household spending money are pushed down
- (3) Fiscal 2026Growth slows
- (4) Fiscal 2027 onwardThe effect of pricier oil fades and growth gradually rises
Points
- When crude oil gets more expensive, companies' profits and the money households can spend tend to shrink
- The economy in fiscal 2026 is expected to grow more slowly, but to keep growing
- Price increases in fiscal 2026 are expected to be large, in the high-2% range
What the words mean
- crude oil
- a resource that is the source of gasoline, electricity, plastic and many other things
- terms of trade
- the price of what a country exports compared with the price of what it imports; they worsen when import prices rise
先行きのわが国経済を展望すると、2026年度については、中東情勢の影響を受けた原油価格上昇が、交易条件の悪化などを通じて企業収益や家計の実質所得に対する下押し要因となることから、成長ペースは減速すると考えられる。もっとも、企業部門で高水準の収益が続いてきたことなどに加え、政府による各種施策や緩和的な金融環境などが経済を下支えするため、わが国経済は、伸び率を縮小しつつも、緩やかな成長を続けるとみられる。
- Bank of Japan: Bank of Japan, Outlook for Economic Activity and Prices (April 2026), The Bank's View
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