Japan: The government downgraded estimates for GDP growth in the fiscal year

The Japanese government cut its estimates for economic growth this fiscal, mainly due to a slowdown in overseas demand, highlighting the impact of Russia’s war in Ukraine, strict lockdowns in China due to the coronavirus and a weakening global economy.

The forecast, which serves as the basis for drawing up the government’s state budget and fiscal policy, included much higher estimates for inflation and wholesale prices as rising energy and food costs and a weak yen pushed up prices.

The world’s third-largest economy is now expected to grow 2% in real adjusted terms in the year ending March 2023, according to Cabinet estimates presented to the Economic and Fiscal Policy Council, the government’s top economic panel.

This is a sharp drop from the government’s previous forecast in January of 3.2% growth. The decline comes from weaker exports, which the government expects to grow by 2.5% from the previous estimate of 5.5%.

The government forecast 1.1% growth for the next fiscal year starting in April 2023.

The government’s forecasts come days after the Bank of Japan downgraded its growth estimates for the year to March 2023 to 2.4 percent from 2.9 percent three months ago.

He also underlined the central bank’s stance to maintain support measures, despite several economies starting to raise interest rates to fight inflation.

The government forecasts that overseas demand will subtract 0.3% from GDP during the current fiscal year, compared with an expected increase of 0.2%.

It also forecasts that inflation will come in at 2.6% this fiscal, up from a previous estimate of 0.9%.

For the years 2022 and 2023, the government predicts economic growth of 2.1% and 2.2% respectively.