Japanese government expects economy to return to pre-COVID levels by year-end
By Leika Kihara
TOKYO (Reuters) – Japan’s economy is expected to return to pre-pandemic levels by the end of this year, helped by strong exports as well as consumer spending supported by advances in vaccinations, the government said in revised estimates released Tuesday.
In a mid-year review, the government now predicts that in the fiscal year through the end of March, the economy will grow by 3.7% and at some point, real gross domestic product (GDP). will exceed the 547 trillion yen ($ 4.9 trillion) recorded in October-December 2019.
“Japan’s recovery will be moderate in the first half of this fiscal year, but accelerate in the second half due to steady gains in exports and capital spending,” the government said, adding that there would also be a recovery. expenditure on services.
The forecast appears to show weaker expansion than the government estimate of 4.0% in January for this fiscal year. But this is largely due to a weaker than expected 4.6% contraction of the economy in FY2020.
Growth for the next fiscal year is expected to slow to 2.2% as the pace of exports slows. But robust domestic demand will push GDP to a record 558 trillion yen, according to projections that serve as the basis for policymaking and state budgeting.
The forecast follows a central bank report released on Monday that portrayed a cautiously optimistic view of regional economies in a sign that policymakers would rather delay accelerating monetary or fiscal stimulus any time soon.
The world’s third-largest economy currently lags behind the United States, Great Britain and many European countries in immunization. The rising number of infections forced Japan to maintain a “near” state of emergency weeks before the start of the Tokyo Olympics on July 23.
($ 1 = 110,8,800 yen)
(Reporting by Leika Kihara; Editing by Edwina Gibbs)
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