JAPAN’S FORECASTS

JAPAN FORECASTS 2.5PC GROWTH IN FISCAL 2013 ON STIMULUS, WEAKER YEN

JAPAN'S Cabinet approved an upbeat growth forecast today that could give the government some leeway in compiling a budget for the upcoming fiscal year in April.

Eleanor Warnock (DJN)

The Australian, January 28, 2013

The report estimates Japan will post 1 per cent real growth in the fiscal year ending in March and 2.5 per cent growth in the following fiscal year of 2013 and will be used to gauge tax revenue for a budget slated to be approved this week.

An optimistic growth forecast could allow for some elbow room in predicting government revenue and new bond issuance in the developed world's most indebted country. According to local media, ruling parties and the government approved a proposal for a 92.61 trillion yen budget ($975 billion) yesterday, with tax revenue expected to outpace total new government debt issuance by Y250 billion.

Economists say Japan's economy is coming out of its fifth technical recession--defined as two or more consecutive quarters of negative growth--in 15 years.

The report also showed the core consumer price index rising 0.5 per cent on year in fiscal 2013. That would be the first positive figure since fiscal 2008.

The 2.5 per cent growth figure for fiscal 2013 is slightly higher than numbers given by private economists who have upped growth forecasts on the back of yen weakness and government stimulus plans since the Liberal Democratic Party took power in December.

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