Japan Now Sees Covid-Hit Economy Shrinking 4.5% This Fiscal Year
Back in December, the government was expecting growth of 1.4% this fiscal year.
(Bloomberg) -- Japan’s government sees its pandemic-hit economy shrinking around 4.5% this fiscal year, according to mid-year projections released Thursday by the Cabinet Office.
Gross domestic product should rebound next fiscal year, growing about 3.4% in price-adjusted terms, it said. Inflation is forecast to remain lackluster, with the overall consumer price index dropping 0.3% in the 12 months through March, before eking out a 0.5% gain the year after.
Japan releases projections only twice a year, so these are its first official forecasts since Covid-19 began to roil world economies. Back in December, the government was expecting growth of 1.4% this fiscal year.
On the brighter side, the government’s latest projections show the unemployment rate barely rising, to just 3.2%, in the period through next March, although the forecast doesn’t account for furloughed people still technically attached to employers but not working.
The government also acknowledged that the outlook could get even worse if a second wave of Covid-19 infections hits global economies in the fall. Under that scenario, Japan’s GDP would shrink 5% this fiscal year and rebound just 3% the year after, it said.
Separately, the Cabinet Office said Thursday that Prime Minister Shinzo Abe hadn’t presided over the longest growth streak in Japan’s postwar history, as some had predicted.
The expansion that began when Abe took office in December 2012 officially ended in October 2018, two months shy of a 73-month streak during the mid-2000s, the government said.
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