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Japan boosts economic growth outlook for the current fiscal year amid strong external demand

Japan boosts economic growth outlook for the current fiscal year amid strong external demand

Posted on December 26, 2023   |  

The government has slightly increased its predictions for economic growth this fiscal year, now expecting a 1.6% real growth rate, up from the earlier estimate of 1.3%.

External demand, driven by a rebound in inbound tourism and higher automobile production, contributes significantly, adding 1.4 percentage points to the overall growth.

Economic growth is anticipated to dip to 1.3% in the next fiscal year (beginning in April), with a slight increase from the previous estimate of 1.2%.

The projection includes a predicted rebound in domestic demand for the next fiscal year, supported by planned income tax cuts and ongoing wage hikes.

Consumer prices are forecasted to increase by 3.0% this fiscal year, accounting for energy subsidies that reduce inflation by 0.6 percentage points.

Inflation is expected to ease to 2.5% in the following fiscal year as the impact of energy subsidies diminishes.

Nominal gross domestic product (GDP) is set to rise by 5.5% this fiscal year and 3.0% in the next, reaching a record ¥615 trillion ($4.29 trillion) in fiscal 2024.