Japan and US economic outlooks face fiscal and geopolitical risks

Economic analysts are highlighting key fiscal and market risks for Japan and the United States. In Japan, attention is turning toward the end of August, when government ministries are expected to submit their budget requests for fiscal year 2027. This follows the cabinet's decision on the ‘Basic Policy,’ which aims for a fundamental shift in how budgets are constructed to support growth.

Simultaneously, market volatility is expected to persist. Analysts suggest that Japanese and US stock markets may face downward pressure in September and October. In the US, geopolitical tensions involving Iran and the upcoming 2026 midterm elections are cited as major risk factors. There is also significant focus on the influence of wealthy backers on US policy and the potential for the administration to influence the Federal Reserve to favor economic outcomes that benefit high-net-worth individuals.