Japan’s government on Friday raised its growth forecasts for private consumption, capital expenditure, and housing investment for the current fiscal year as domestic demand gathers strength.
The government left its overall forecast for gross domestic product growth unchanged in fiscal 2017, which started in April, due to an expected decline in inventories and slightly slower growth in fiscal spending, Reuters reported.
The government also expects consumer prices to rise 1.1% this fiscal year and 1.3% in fiscal 2018, highlighting a very slow build up in inflationary pressure.
The forecasts, which Japanese Prime Minister Shinzo Abe’s cabinet will use to compile next fiscal year’s budget, show the economy is likely to continue expanding comfortably unless there is a sudden and large external shock.
Consumer spending is forecast to rise 0.9% in fiscal 2017, according to forecasts that the government’s top advisory panel approved after a meeting on Friday. That is more than the previous forecast for 0.8% growth released in January.
Housing investment is expected to rise 0.8% this fiscal year, well above the previous estimate of 0.1% growth as the Bank of Japan’s quantitative easing sparks a revival in property development.
The government expects capital expenditure to rise 3.6% in fiscal 2017, more than its previous estimate for a 3.4% increase.
Gross domestic product is expected to expand by 1.4% in fiscal 2018, but this does not take into account the size of fiscal spending because next fiscal year’s budget has yet to be decided.
In fiscal 2017 overall consumer prices are expected to rise 1.1%, unchanged from the government’s previous forecast in January. In fiscal 2018 consumer prices are seen rising 1.3%, underlying the difficulty in achieving the BoJ’s 2% inflation target.