Data released by the Japanese government on May 26 showed that equipment investment by Japanese companies in the first quarter of 2026 was virtually unchanged from the same period last year. This is a sign that the growth momentum driven by investment related to artificial intelligence (AI) is slowing down.
Specifically, according to seasonally adjusted figures, capital expenditure by the corporate sector in the first three months of this year rose just 0.1% from the first quarter of 2025, sharply lower than the 2.1% increase recorded in the previous quarter. Key sectors such as semiconductor manufacturing and high-tech equipment saw a slight decline in investment.
Analysts say the result reflects cautious sentiment among businesses in the face of external uncertainties, particularly the conflict in the Middle East. Escalating geopolitical tensions have disrupted energy and raw material supply chains, driving up input costs and affecting the investment decisions of many Japanese companies.
Japan's Ministry of Finance also noted that if the situation in the Middle East continues to deteriorate, the outlook for equipment investment in the coming quarters could be negatively affected, weakening the country's already fragile economic recovery momentum.
