The Bank of Japan (BOJ) released its July 2026 Outlook for Economic Activity and Prices, expecting Japan's economy to continue growing moderately in fiscal 2026, albeit at a decelerated rate. This deceleration is primarily due to the impact of rising crude oil prices reflecting the situation in the Middle East. However, the economy is expected to be underpinned by government measures, accommodative financial conditions, and increasing global AI-related demand. The BOJ projects economic growth to rise moderately from fiscal 2027 onward, as the adverse effects of high crude oil prices wane and a virtuous cycle from income to spending gradually intensifies. Projected real GDP growth rates are largely unchanged from the previous report.