The Shiga Bank

DRIVING INVESTMENT AND INNOVATION FROM SH GA

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Japan's economy is showing renewed stability and moderate growth as it moves further away from decades of deflation and ultra-low interest rates. According to the Organisation for Economic Cooperation and Development, Japan's real GDP expanded by around 1.3% in 2025, supported by stronger domestic demand and business investment, while growth is projected to remain positive at roughly 0.9% annually through 2026-2027. Nominal GDP has reached approximately ¥663.8 trillion (about $4.2 trillion), keeping Japan among the world's largest economies, while wage growth and corporate investment are gradually strengthening domestic consumption. Inflation has also stabilized close to the Bank of Japan's longstanding 2% target, marking a structural shift in the country's economic environment and creating a more favorable landscape for businesses, investors, and financial institutions operating across the country. Within this changing landscape, Japan's banking sector is also undergoing a quiet transformation. For years, near-zero or negative interest rates compressed margins and limited growth opportunities. As monetary conditions gradually normalize, banks are reassessing their strategies and expanding beyond traditional lending models. Regional financial institutions in particular are redefining their role—moving toward a model that emphasizes regional revitalization, support for small and medium-sized enterprises, and closer collaboration with local industries.