BOJ Tankan Survey for March: Identify Priority Policies to Alleviate Anxiety

Editorial

14:34 JST, April 2, 2026

While the survey confirmed the ongoing trend of a moderate economic recovery, it showed that the outlook for corporate business confidence was clouded by concerns over the situation in Iran.

To prevent a sudden business slowdown, the government must work closely with the private sector to implement thorough crisis management measures.

The Bank of Japan has released the results of its Tankan quarterly economic survey for March. The diffusion index indicates corporate business confidence. Regarding present conditions, the index for large manufacturing companies, which is a leading indicator, was 17, up 1 percentage point from the previous quarter, marking the fourth consecutive quarter of improvement.

This is the first Tankan survey since the situation in Iran began to deteriorate. The index for “petroleum and coal products” fell by 18 points, and that of “chemicals” also declined by 5 points. Nevertheless, an improving trend could be maintained largely due to increased investment in artificial intelligence-related sectors such as data centers and semiconductors.

Both the indexes for “production machinery” and “nonferrous metals” improved by 10 points.

The indexes for large nonmanufacturing firms, which primarily rely on domestic demand, such as tourism and food services, also remained at a high level of 36.

The challenge for the Japanese economy is to achieve stable growth through wage increases that outpace rising prices. So far, it can be said that the economy has been on such a recovery track.

However, Iran has effectively blocked the Strait of Hormuz, a major artery for energy transportation, raising concerns about the impact on the global economy, including Japan.

Future business sentiment among large manufacturers has deteriorated by 3 points, which is a cause for concern.

Since Iran has destroyed energy-related facilities in the Persian Gulf, there is a strong view that a swift recovery will be difficult.

Naphtha, refined from crude oil, serves as a raw material for a wide range of products, including plastics, synthetic rubber and synthetic fibers such as nylon. Any shortage would have a significant impact on people’s daily lives.

Although Japan normally relies on imports of naphtha from the Middle East, it has currently doubled its procurement from sources outside the region, such as the United States. It is crucial to expand alternative procurement sources, including strengthening domestic refining capabilities.

In addition, the government has begun releasing about 50 days’ worth of oil reserves — the largest amount ever. It is also considering additional releases.

The government has been working to coordinate the supply of gas (ethylene oxide) used to sterilize medical equipment, diesel fuel for route bus companies, and the refueling of heavy fuel oil for submarine cable-laying vessels.

Concerns are growing across all sectors regarding shortages of petroleum and related products — not only in the medical field, which directly affects people’s lives, but also in areas such as bus and rail transportation, greenhouses and dairy processing plants.

It is crucial for the government to prioritize sectors directly affecting people’s daily lives and to support the supply of necessary petroleum and related products.

(From The Yomiuri Shimbun, April 2, 2026)