Economic and fiscal policy minister Kaoru Yosano suggested Wednesday the government will downgrade its estimate of economic growth in fiscal 2011 to around zero percent from an earlier forecast of 1.5 percent due to the negative impact of the March 11 disaster.
“Usually there is no big difference between the government projection and the average of private sector forecasts,” Yosano told reporters, referring to the recent average for predictions by 22 think tanks and financial institutions of 0.2 percent growth in real gross domestic product for the year through next March.
The Cabinet Office is due to release a revised outlook report next month.
Yosano was speaking after a meeting of Cabinet ministers to assess the economic conditions three months after the disaster struck.
Prime Minister Naoto Kan repeated Yosano’s sentiment.
“The economy is expected to recover in the latter half of this year, but in the medium and long term, new efforts will be required to stimulate growth,” Kan told the meeting.
Yosano added that the economy “will smoothly return to a growth path between this fall and the beginning of next year,” saying that supply-chain disruptions, which have significantly slowed industrial output and exports, are being addressed at a faster pace than earlier thought.
But he also noted some risks to the recovery scenario, including the looming threat of electricity shortages, with a nuclear power plant and some thermal plants crippled.
Minister of Economy Trade and Industry Banri Kaieda, among others, also said the nation will stick with nuclear power generation in spite of the crisis at the Fukushima No. 1 plant.
“The Cabinet must make a full response to restart the operations of (idled) atomic power plants,” Kaieda said.
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