This report does not constitute a rating action. It's not the result that matters, it's the meaning of it. Policy changes may be coming in Japan. Upper House elections on July 20, 2025, showed a slide in popular support for the ruling Liberal Democratic Party-Komeito coalition. The Japanese government is likely to respond by introducing measures that could reverse the decline. Its reading of the reasons for the electoral setback will influence these changes. Looser fiscal policy and tighter immigration rules are probable. Politicians focused on a few key social issues in their election campaigns: (1) the rising cost of living, driven by accelerating inflation over the past couple of years; (2) relatively lackluster wage growth, which exacerbated the impact
