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 buoyed by progress in vaccinations, the government said in revised estimates released on Tuesday.

In a mid-year review, the government now projects that in the fiscal year to the end of March the economy will grow by 3.7% and that at some point gross domestic product Real (GDP) will exceed the 547 trillion yen ($4.9 trillion) mark in October-December 2019.

“The recovery in Japan will be moderate in the first half of this fiscal year but pick up speed in the second half due to steady gains in exports and capital spending,” the government said, adding there would also be a recovery. service expenses.

Forecasts appear to point to weaker expansion than the government’s January estimate of 4.0% growth for the current fiscal year. But that’s largely due to a weaker-than-expected 4.6% contraction in the economy in fiscal 2020.

Growth for next fiscal year is expected to slow to 2.2% as the pace of exports slows. But robust domestic demand will lift GDP to a record 558 trillion yen, according to projections that serve as the basis for policy-making and the state budget.

The forecast follows a central bank report on Monday that paints a cautiously optimistic view of regional economies in a sign that policymakers prefer to wait for intensified monetary or fiscal stimulus anytime soon.

The world’s third-largest economy currently lags behind the United States, Britain and many European countries when it comes to vaccinations. Rising infections have forced Japan to maintain a “near” state of emergency weeks before the Tokyo Olympics start on July 23.

(Reporting by Leika Kihara; Editing by Edwina Gibbs)

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