Japan’s economy is projected to expand at a moderate pace in 2026, with consensus forecasts from the Cabinet Office, IMF, Nomura, and others pointing to real GDP growth of roughly 0.8–1.0 percent for the calendar year and fiscal 2026. This outlook rests on resilient exports tied to global AI demand for semiconductors, steady business investment, and policy support offsetting higher import costs. The current expansion has already surpassed prior postwar records at 74 months as of mid-2026, while leading indicators show recession probabilities near 3 percent. Elevated crude-oil prices linked to Middle East tensions and yen weakness remain the chief near-term headwinds, yet analysts view these as manageable drags rather than recession triggers. Tail risks include a sharper or prolonged energy shock that could compress real incomes and tip quarterly growth negative.