Japan’s economic momentum showed signs of weakening in February, even before the full impact of the ongoing Iran war began to take hold, according to government data released মঙ্গলবার.

A key index measuring the state of the economy, known as the coincident indicator, fell 1.6 points from the previous month to 116.3—marking its first decline in two months and signaling a soft patch in economic activity.

The drop was largely driven by reduced shipments of semiconductor chips and chip-making equipment, পাশাপাশি automobile production also declined. These trends have raised doubts about the Bank of Japan’s expectation that strong global demand will continue to support exports.

At the same time, early signs of stress are emerging in smaller industries. A private survey revealed a sharp rise in bankruptcies among house painting businesses—many of which are already struggling with intense competition and chronic labor shortages.

The situation has been worsened by rising fuel costs and supply disruptions linked to the war, particularly affecting imports of oil and naphtha from the Middle East—resources Japan heavily depends on.

Data from Tokyo Shoko Research showed that bankruptcies in the painting sector jumped 22.2% in the fiscal year ending March, reaching the highest level in 23 years.

Adding to the pressure, major paint manufacturers have raised thinner prices by 70% to 80% מאז March due to supply constraints. Analysts warn that smaller operators may struggle to pass these higher costs onto customers, potentially leading to further bankruptcies in fiscal 2026.

Economists caution that if disruptions to naphtha supplies persist, factory output could decline further—amplifying the broader economic impact in the months ahead.