The government lowered its japan GDP growth forecast for the current fiscal year, mainly due to slowing external demand, and highlighted the impact of Russia’s war in Ukraine, China’s strict COVID-19 lockdown, and a global economic downturn.
The japan GDP growth forecasts, which form the basis for setting the state budget and government fiscal policy, include higher estimates of consumer and wholesale price inflation, as higher energy and food costs and a weaker yen are pushing up prices.
The world’s third-largest economy is anticipated to grow by about 2.0 percent in real terms in price-adjusted terms for the financial year ending March 2023, according to forecasts submitted by the Cabinet Office to the government’s top economic council.
This is a significant downgrade from the government’s previous forecast for 3.2% growth in January. The decline was largely due to weak exports, which the government now expects to grow by 2.5%, down from an earlier estimate of 5.5%.
The government expects japan’s GDP growth of 1.1% in the next fiscal year, which starts in April 2023.
The Bank of Japan’s forecast came after it cut its growth projection for the current fiscal year to March 2023 to 2.4% from 2.9% three months ago, underscoring the central bank as several other economies raise interest rates The stance on massive stimulus will remain. to curb inflation.
The government expects foreign demand to shave 0.3 percentage points off the entire gross domestic product this fiscal year, down from an earlier forecast for a 0.2 percentage point increase.
It expects headline consumer inflation, which includes volatile energy and fresh food costs, to be 2.6% this fiscal year, down from the 0.9% forecast in last month’s assessment.
Wholesale price inflation is forecast at 9.8% this fiscal year, well above the 2.0% expected in January, as higher oil and food prices and a weaker yen push up raw material costs.
Rising consumer inflation is unlikely to weigh heavily on private consumption as higher spending on services such as tourism has boosted economic growth this fiscal year, a Cabinet Office official said.
The Cabinet Office projects nominal economic growth of 2.1% in 2022 and 2.2% in 2023. Higher nominal growth estimates indicate that the government expects tax revenue to increase.