Japan's government expects the nominal economic growth to exceed real expansion in fiscal 2013 for the first time since 1997 and also sees an end to deflation in the economy.
In the latest set of forecasts, published by the Cabinet Office on Friday, the government projected real economic growth of 1.7 percent for the fiscal 2013, following an estimated expansion of 2.2 percent in the current year ending March 2013.
The real GDP estimate matches the Bank of Japan's forecast. The real growth estimate for the current fiscal year was left unchanged from the government's previous projection.
According to the latest estimate, the nominal GDP growth is seen at 1.9 percent for fiscal 2013. This is set to exceed inflation-adjusted real growth next year for the first time in 16 years.
The slowdown in the global economy is dampening Japanese exports. The economy is set to recover moderately on strong private consumption, the government said.
For fiscal 2013, private consumption is expected to grow 1.6 percent and private capital investment to rise 3.8 percent. Housing investment is seen rising 5.1 percent.
A rush in consumer spending ahead of the proposed sales tax hike will lift the GDP by around 0.6 percentage points in fiscal 2013, Economic and Fiscal Policy Minister Motohisa Furukawa told reporters.
The government last week passed the controversial sales tax hike bill. The sales tax will be doubled in two stages to 10 percent by 2015 from the current 5 percent.
Further, the government said consumer prices are set to rise for the first time in four years. The government forecasts 0.2 percent rise in prices during the current year and a 0.5 percent increase in the fiscal 2013.
by RTT Staff Writer
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