The Economic Planning Agency announced Thursday it has revised upward its economic growth projection for fiscal 2000 to around 1.5 percent in real terms from the original 1 percent predicted last December.
Agency officials said the move was in line with an increase in consumer spending and private-sector equipment investment.
The EPA’s upward revision of growth in gross domestic product — the total value of goods and services produced within the country — was reported to a joint meeting of Cabinet ministers in charge of economic policies and the Government-Ruling Parties Budget Conference, convened Thursday morning to adopt an 11 trillion yen economic stimulus package.
The EPA’s projections were still not as rosy as those posted by some private-sector think tanks, however, many of which have forecast growth of 2 percent or more for the year ending March 31.
EPA chief Taichi Sakaiya told a news conference after the meeting that an increase in firms’ capital spending in the second quarter of this year made the upward revision possible.
According to the revised forecast, corporate investment in equipment will rise to 6.5 percent — a huge boost from its former projection of 1.4 percent — while consumer spending, which makes up about 60 percent of GDP, will mark a 1.2 percent increase, up from the original 1 percent.
In contrast, the EPA drastically revised its growth expectations for total public works spending by the central and local governments downward to a 5.2 percent decline from its original projection of a 0.9 percent increase.
Sakaiya explained that with local governments in fiscal disarray, it would be difficult for them to finance additional public works projects. As a result, total spending on public works is expected to be smaller than that of the previous fiscal year, he said.
The EPA only reported the revised outlook to Thursday’s meeting and said it would not seek Cabinet approval of it, since it is considered a preliminary figure.
This is the second straight year that the agency has released an independent revision without the approval of the Cabinet.
A formal change to the official GDP growth forecast would involve revising tax-revenue projections for the same fiscal year, EPA officials said.
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