Japan Reuters Tankan Index

Business sentiment among Japanese manufacturers declined to -1 in March 2025 from +3 in February, marking the first negative reading in three months. The drop reflects growing concerns over U.S. tariff policies and economic weakness in China. As an export-driven economy, Japan remains highly vulnerable to disruptions in global trade, particularly as the U.S. enforces tariffs on key trading partners. One respondent also noted the impact of China’s slowdown, stating: “Orders that had primarily come from China are now being shifted to production in Japan and other overseas locations.” Despite the current decline, sentiment is expected to recover in the coming months, with the index projected to rise to +4 by June. The monthly Reuters poll serves as a key indicator for the Bank of Japan’s quarterly Tankan business survey.