On July 9, the government presented its fiscal projections for medium- to long-term analysis at this year’s 11th meeting of the Council on Economic and Fiscal Policy. In the analysis, they prepared two scenarios based on future total factor productivity, labor force projections and world economic trends. One is a baseline case, and the other is a high economic growth case. In the former, net annual growth of Japan’s gross domestic product is estimated at slightly more than 1.0 percent at the beginning of 2020s, while in the latter, GDP growth of 2.0 percent is projected.

The most shocking part of this report is that even in the more optimistic scenario, it is clear that the government can never realize its fiscal target of achieving a primary balance surplus by fiscal 2025 — even though the target year has just been pushed back by five years from fiscal 2020.

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