Posted on 28 Jan 2013
Japan on Monday said the world's number three economy was on track to expand 2.5 percent in the fiscal year starting in April, thanks to fresh stimulus and a recovery in overseas markets.
Prime Minister Shinzo Abe's cabinet approved the forecast - higher than an estimate of one-percent growth for the current year to March - on Monday morning, government officials said.
The estimate is slightly higher than those from economists who have also upped their outlook on the back of a weaker yen and new stimulus measures, Dow Jones Newswires reported.
"We are forecasting that the economy will recover as the global economy is expected to pick up gradually, while we're also expecting a steady recovery in demand and an increase in jobs" at home, Chief Cabinet Secretary Yoshihide Suga told a press briefing.
The government's top spokesman warned that several factors could impact the final growth figure, including swelling public debt and fluctuations in the yen, a key factor for the country's trade picture.
But Economic revitalisation minister Akira Amari said he was confident the new target would be hit, telling Jiji Press: "Overseas risks are decreasing."
Last week, the Bank of Japan raised its growth forecast for the same fiscal year to 2.3 percent from a previous 1.6 percent estimate, as it announced an open-ended asset buying programme and new inflation target aimed at ending the deflation that has haunted the economy for years.
Abe, who took office late December after a landslide national election victory, unveiled a 20.2 trillion yen ($222 billion) stimulus package this month in the latest bid to stoke growth in the limp economy.
The figure also includes local government and private-sector spending.
Tokyo's new forecast will be used to produce a fresh budget, with Abe's cabinet set to endorse 92.6 trillion yen in spending on Tuesday, Japanese media reported. - AFP
Earlier report
TOKYO: Japan's economy will likely grow 2.5 percent in the fiscal year starting in April, the government said on Monday, as Prime Minister Shinzo Abe's ambitious fiscal and monetary policies boost domestic demand and a rebounding overseas economy helps exports.
The Cabinet Office's economic forecast, issued annually and revised every summer, will serve as a basis for the compilation of the government's budget, a draft of which is likely to be approved by the cabinet this week.
The government's projection for real gross domestic product is roughly in line with the Bank of Japan's estimate issued last week, but it is stronger than the median estimate for 1.8 percent growth in a Reuters poll.
The new forecast is also stronger than the previous projection of 1.7 percent growth made last summer.
"Exports are expected to grow as the global economy is likely to recover moderately, which would help corporate activity. The government measures will also help capital spending," an official from the Cabinet Office said.
"Also, employment is likely to increase, helped by the economic measures, which would boost private consumption."
Abe led his Liberal Democratic Party to a landslide victory in December and his campaign for aggressive budget and monetary stimulus has pushed the yen lower and sparked a stock market rally on hopes that a weaker currency will boost exports.
Earlier this month, the government approved a 10.3 trillion yen ($114.4 billion) economic stimulus plan, the biggest spending boost since the global financial crisis.
The government also said Japan was expected to achieve nominal gross domestic product growth of 2.7 percent in fiscal 2013, exceeding real GDP growth for the first time in 16 years.
There will be a rush of consumer spending before a planned sales tax hike in April 2014, which will boost growth by 0.4 percentage point for the next fiscal year, it said.
For the current year to March, the government cut its growth forecast for real GDP to 1.0 percent from 2.2 percent.
The consumer price index will rise 0.5 percent in the next fiscal year, after an anticipated 0.1 percent fall this fiscal year, according to the estimate, indicating there is still a long way to go to achieve the Bank of Japan's new inflation goal of 2 percent.
Under relentless pressure from Abe, the BOJ doubled its inflation goal and pledged open-ended asset buying from 2014.
The GDP deflator, a broad measure of price trends, will likely rise 0.2 percent in fiscal 2013 after declining 0.6 percent this fiscal year, the government estimated.
That would mark the first time since fiscal 1997 that the GDP deflator has risen, the government said.
It also noted that Japan needs to pay heed to risks such as Europe's sovereign debt, uncertainty in the overseas economy, foreign exchange movements and power supply restraints.
