Japan's Growth Forecast for This Year Revised Up from 2.9% to 3.8%

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Cho Hyun-ui] Japan has significantly raised its economic growth forecast, expecting the growth rate to approach 4% this year.

The Bank of Japan, Japan's central bank, raised its forecast for the real gross domestic product (GDP) growth rate for the 2022 fiscal year from 2.9%, announced in October last year, to 3.8% on the 18th.

The Bank of Japan stated, "As the downward pressure on service consumption and supply constraints caused by COVID-19 ease, recovery is expected supported by increased demand from abroad, accommodative financial conditions, and the effects of government economic measures."

The forecast for this year's consumer price index (excluding fresh food) inflation rate was also revised upward from 0.9% to 1.1% during the same period.

The Bank of Japan analyzed, "Rising energy prices and raw material costs will continue to have an impact for the time being, and going forward, the demand gap (GDP gap?the difference between total demand and supply capacity) will improve, and medium- to long-term expected inflation will rise, creating underlying inflationary pressure."

Additionally, at the policy board and monetary policy meeting held on the same day, the Bank of Japan decided to keep the short-term interest rate at -0.1% and maintain large-scale monetary easing by purchasing long-term government bonds without an upper limit to guide the 10-year government bond yield, a benchmark for long-term interest rates, to around 0%.