The Bank of Japan assesses the current situation of Japan's economy as follows: "Japan's economy has recovered moderately, although some weakness has been seen in part, partly due to the impact of the situation in the Middle East." To elaborate on this point, I would like to examine several elements of the economy, starting with developments in overseas economies. Regarding overseas economies, uncertainties heightened considerably in spring 2026, reflecting the situation in the Middle East, but since then, real economic activity has not seen a significant downward deviation on the whole (left panel of Chart 1). ... (full story)