Japan expects slower 2.2pc growth in 2012 in face of strong yen headwind
JAPAN'S economy will expand 2.2pc in the fiscal year starting in April, the government said yesterday, as housing investment picks up following this year's devastating earthquake and as subsidies spur consumption and capital expenditure.
The cabinet said it expected the economy to shrink 0.1pc in the fiscal year through March 2012.
The government had previously forecast the economy to grow 0.5pc in the current fiscal year and 2.8pc in the year through March 2013. It lowered its economic growth forecasts as the country struggles with the yen's export-sapping strength and the fallout from Europe's debt crisis. It said unemployment would fall to 4.3pc from the 4.5pc projected for this year.
The cabinet office issues economic forecasts in December for the following fiscal year, and its figures provide the basis for the government to compile its annual budget.
The government's forecast for real gross domestic product is stronger than the median estimate for 1.8pc growth, according to a Reuters survey.
The government expects market turbulence from Europe's sovereign debt crisis to subside next year and for exports to recover as overseas economies pick up, and this may be more optimistic than some private sector economists, a cabinet office official told reporters.
The government is also more optimistic than some economists on Japan's domestic demand, the official said.
The GDP forecast for next fiscal year is lower than the previous forecast for 2.7pc to 2.9pc growth, but the government could still face criticism that it issued overly optimistic figures to help push through a plan to double the 5pc sales tax.
The government also cut this fiscal year's forecasts as a strong yen and Europe's sovereign debt crisis hurt exports. (Reuters)