Japan Forecasts 10 Trillion Won Deficit Despite High Economic Growth Rate Next Year

The Japanese government is expected to incur a large-scale deficit even if it achieves a high economic growth rate in the 2025 fiscal year (April 2025 to March 2026), which it has presented as the point of achieving a fiscal surplus.

Kyodo News and NHK reported on the 22nd that the Japanese government announced at the Council on Economic and Fiscal Policy that even with a high economic growth rate in the 2025 fiscal year, the deficit in the basic fiscal balance of the national and local governments is expected to reach 1.1 trillion yen (approximately 10 trillion won).

[Image source=Yonhap News]

The Japanese government assumes a high economic growth rate of 2% for real Gross Domestic Product (GDP) and 3% for nominal GDP.

If the real and nominal GDP growth rates are in the mid-0% range, the fiscal deficit during the same period is expected to reach 2.6 trillion yen (approximately 23.5 trillion won). NHK stated, "Although the expected deficit has decreased compared to before, a fiscal surplus is expected to be achieved only in the 2026 fiscal year."

At the meeting, Japanese Prime Minister Fumio Kishida said, "We will steadily promote fiscal soundness to maintain credibility regarding the sustainability of public finances."