The government said Friday that the country’s economy is expected to grow 4.0% in fiscal 2021 in price-adjusted real terms, an upward revision from a 3.4% expansion estimated in July as it adopted a stimulus package earlier this month.
A 4.0% expansion would be the fastest growth rate since the economy grew 5.6% in fiscal 1990, which ended in March 1991.
The latest estimate is optimistic, however, compared with around 3.5% growth projected by private economists. Economic growth may end up short of the government’s forecast if consumption and exports fall again amid the coronavirus pandemic.
The government aims to lift gross domestic product in the final three months of fiscal 2021 to the level marked in October-December 2019, before the COVID-19 outbreak, totaling ¥548 trillion on an annualized basis.
In nominal terms, the government expects the economy to grow 4.4% in fiscal 2021.
The growth estimate will be reflected in the government’s annual tax revenue forecast.
For fiscal 2020, the government lowered its growth estimate in real terms from minus 4.5% released in July to minus 5.2% following the recent surge in coronavirus cases.
“The pace of economic recovery is expected to become moderate this winter” as spending on dining out and accommodation is likely to fall due to a halt in the government’s Go To Travel tourism promotion program, a Cabinet Office official said.
Japan is thus expected to post negative economic growth for the second consecutive year. The pace of contraction would be the fastest in post-World War II history, eclipsing minus 3.6% marked in fiscal 2008 amid the global financial crisis.
The government expects its ¥73.6 trillion stimulus package, adopted Dec. 8, to push up GDP by about 2.5% in fiscal 2021.
It estimates that personal consumption will expand 3.9% in fiscal 2021 after dropping 6.0% in the previous year and that capital investment will increase 2.9% after declining 8.1%.
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