Revised projections by several private think tanks show that many of them believe the economy will expand by about 2 percent during this fiscal year, greater than the government target of 1 percent growth in real terms.
Economic research institutes, including Daiwa Institute of Research, Nomura Research Institute and Mitsubishi Research Institute, revised upward their initial estimates on the grounds that strong demand for products and services related to IT will substantially stimulate corporate capital spending and personal consumption. This will offset the expected drop in public works spending in the latter half of the fiscal year.
Of the institutes, Daiwa had the rosiest projection -- 2.8 percent growth for the year that ends in March. The new figure assumes the government's planned economic stimulus package will go ahead, with fresh spending estimated at 2 trillion yen.