Japan Raises Next Year's Growth Forecast to 3.2%...Significantly Lowers This Year's Projection

[Asia Economy Reporter Seulgina Jo] The Japanese government expects the 2022 gross domestic product (GDP) growth rate to reach 3.2% on a real basis, excluding price fluctuations. The plan aims to restore domestic demand centered on personal consumption through large-scale economic measures. This is an upward revision from the previously presented forecast of 2.2%.

According to the Nihon Keizai Shimbun on the 23rd, the Japanese government approved this economic outlook at a cabinet meeting on the same day. This is expected to serve as the basis for the 2022 fiscal year budget formulation.

The 3.2% proposed by the government exceeds the average 3.0% forecast by private institutions. The nominal GDP growth rate is expected to be 3.6%.

In particular, the Japanese government anticipates a clear recovery in private consumption, which accounts for about 50% of GDP, next year. This is because the effects of economic measures involving large-scale funding for public investment and other areas are expected to materialize.

The growth rate forecast for the 2021 fiscal year, ending in March next year, was sharply revised downward from the previous 3.7% to 2.6%. This is due to the emergency declarations lasting until the end of September amid the spread of COVID-19, which adversely affected the economy. The Japanese government initially set a goal to recover GDP to pre-COVID-19 levels within the year, but in this economic outlook, the period was revised to January-March 2022.

The Nihon Keizai Shimbun reported, "There are concerns that the growth rate may be lower than the government’s forecast due to the spread of the new COVID-19 variant Omicron and worries about economic slowdown overseas in countries such as the United States and China."

This content was produced with the assistance of AI translation services.