Bank lending in Japan is increasing despite a decline in the monetary base under the Bank of Japan’s interest rate hikes and monetary normalization. For instance, outstanding domestic bank lending in November 2025 increased by 4.5% year on year. Excluding data during the COVID-19 pandemic period, when companies were supported by policy loans, this was the largest year-on-year increase since bank lending statistics began in 1991.
In line with the increase in bank lending, capital investment has also grown steadily. According to the Financial Statements Statistics of Corporations by Industry for the July-September quarter of 2025, capital investment was growing not only in electrical machinery and other manufacturing sectors but also in accommodation, real estate, information and communications, and other non-manufacturing sectors.
Behind the rising demand for funds are price hikes and various other investment-boosting factors, such as strong inbound tourism, investment in data centers related to artificial intelligence (AI) and electricity, and the need for labor saving driven by labor shortages.
The Organization for Economic Cooperation and Development (OECD) has provided an analysis which indicates that responses to uncertainties, technological innovation, and demand changes are prompting global supply chain reorganization, but concluded that deglobalization is not occurring.
Global trade is moving in line with this analysis, expanding despite U.S. tariff hikes. This is not only because Chinese companies are increasing indirect exports to the United States through third countries, but it is also because Western and Japanese companies are aggressively restructuring their supply chains to reduce geopolitical and trade risks.
Although domestic and overseas investment environments are becoming more complex, Japanese companies with abundant internal funds are becoming more proactive in their capital investment positions. Monetary policy normalization and trade environment changes are also encouraging companies in a wide range of sectors to improve productivity and diversify risks. In the year 2026, such growing capital investment may support the Japanese economy and develop a new industrial structure.
>> Original text in Japanese
* Translated by RIETI.
January 6, 2026 - Published in Nihon Keizai Shimbun's "Crossroads"
