Business & Economy

Japan’s central bank improves growth forecast for 2021 fiscal year

Tokyo, Jan 21 (efe-epa).- Japan’s central bank on Thursday improved its growth forecast for the Japanese economy for the next fiscal year.

The Bank of Japan (BoJ) expects Japan’s gross domestic product (GDP) to expand by 3.9 percent in the 2021 fiscal year, which is 0.3 percent higher than its earlier estimate.

The Japanese central bank also revised up its growth forecast for 2022 by 0.2 percent to 1.8 percent.

It was, however, pessimistic on the 2020 fiscal year, during which it expects a 5.6 percent contraction of the domestic economy, 0.1 percent worse than in its previous estimate released in October.

“Japan’s economy is likely to follow an improving trend with the impact of the novel coronavirus (COVID-19) waning gradually, but the pace is expected to be only moderate while vigilance against COVID-19 continues,” the bank said in its report.

However, it added that “downward pressure stemming from the impact of a resurgence of COVID-19 is likely to remain strong for the time being, particularly in face-to-face services consumption.”

The institution attributed the higher projections, especially for the 2021 fiscal year, to the impact of the economic measures adopted by the government.

The BoJ also revised its forecasts slightly up with regard to prices.

The Japanese central bank expects the consumer price index (CPI) to fall by 0.5 percent during the 2020 fiscal year and to increase by 0.5 percent in the following financial year, an improvement of 0.1 percent in both cases. For the 2022 fiscal, the BoJ kept its 0.7 percent year-on-year growth forecast unchanged.

However, the BoJ warned that the “outlook for economic activity and prices provided in this Outlook Report is extremely unclear, since it could change depending on the consequences of COVID-19 and the magnitude of their impact on domestic and overseas economies.”

The Japanese central bank’s economic forecast was published at the end of its two-day monthly meeting, during which it decided to keep its monetary policy unchanged.

The general lines of its easing strategy include setting the short-term policy interest rate at -0.1 percent and keeping the long-term government bond yields at about 0 percent.

Other key measures include the unlimited purchase of government bonds, as well as an initiative to buy exchange-traded funds and other investment assets at an annual pace of 12 trillion yen. EFE-EPA

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