Japan on Thursday upgraded its growth projections for the upcoming fiscal year starting in April, saying the government expects gross domestic product to hit a record despite risk posed from the omicron variant and supply constraints, Cabinet office officials said as reproted by Reuters.
The growth projections were raised to 3.2% for fiscal year 2022 from a forecast 2.2 real GDP growth seen at a mid-year review in July, helped by a record extra stimulus budget approved by parliament this week.
It would be the fastest growth since fiscal year 2010 when the economy grew 3.3%. The stimulus spending is expected to push up GDP by 1.5% this fiscal year, the officials said.
However, the Japanese government sharply downgraded real GDP estimates to 2.6% in the current fiscal year ending in March from 3.7% previously, as the prolonged COVID-19 pandemic and supply constrains in chip production weigh on the recovery.
“The economy has shown signs of picking up, so we must ensure the current positive momentum moves to sustainable economic recovery,” a Cabinet Office official told reporters.
“We have not yet reached autonomous growth but we’re making steady progress to generate a virtuous cycle of growth and wealth distribution.”
Japan’s economy, the world’s third largest, contracted an annualized 3.6% in the July-September quarter following a resurgence of COVID-19 cases, putting a drag on private consumption that makes up more than half of GDP.