The Japanese government on Monday upwardly revised its economic growth forecast, as Prime Minister Shinzo Abe's ambitious policy measures aimed at ending deflation and reviving growth are expected to take hold in the coming months.
A report from the Cabinet Office revealed that the government now expects GDP to rise 2.5 percent in the fiscal year starting April 2013, which is higher than the 1.7 percent growth estimated in August.
The nominal GDP forecast for fiscal 2013 was revised up to 2.7 percent from an August forecast of 1.9 percent. The Cabinet estimates 1 percent real GDP growth for this year, down from an earlier projection of 2.2 percent.
The figures will be used to compile the government's next budget, a draft of which is expected to be approved by the Cabinet this week.
Meanwhile, in his first policy speech at Parliament since taking office, Abe said Monday that the government's most urgent task is to revive the economy. "It is important for the government and BoJ to implement the joint statement," which for the BoJ, includes achieving the 2 percent inflation target, he told lawmakers.
Abe's push for aggressive monetary easing by the Bank of Japan and additional stimulus have recently weakened the yen, aiding exporters. The central bank doubled its inflation target to 2 percent this month, to escape deflation while also announcing an open-ended asset purchase program, which is scheduled to begin in January 2014.
Abe's government approved a stimulus package worth JPY 10.3 trillion earlier in January. The new measures would add 2 percentage points to the gross domestic product and create about 600,000 jobs.
In the report, the Cabinet Office said total consumer price index will rise 0.5 percent in fiscal 2013, unchanged from its previous outlook. This would be the first increase in CPI since fiscal 2008.
Meanwhile, reports indicated that the government is planning total spending of upto JPY 92.6 trillion for fiscal 2013. The tax revenue is expected to exceed the cash from government debt issuance by JPY 250 billion.
The Bank of Japan raised its GDP outlook for fiscal 2013 to 2.3 percent this month. Economic growth for 2012 is estimated at 1 percent. The bank expects the CPI to rise 0.4 percent in fiscal 2013.
by RTT Staff Writer
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