MNI POLICY: Japan Govt Sees Strong Growth Recovery In FY21

Japan's government has raised its real GDP forecast for fiscal 2021 to 4% from the previous 3.4%, as the added stimulus from the latest round of stimulus measures will help ease the impact of Covid-19 on the economy, the Cabinet Office said on Friday.

The government sees growth for fiscal 2020 at -5.2%, lower than its previous prediction of a 4.5% contraction, as the rising number of Covid-19 cases will weigh GDP in Q4.

Unemployment rate in fiscal 2021 is expected to be around 2.7%, down from this fiscal year's forecast of around 3.1%. Overall consumer price index for fiscal 2021 are seen at +0.4% y/y, up from this fiscal year forecast of -0.6%.

The government must keep close watch on downside risks to the economy from the virus and on the impact of developments across financial and capital markets.

As infections rise, the government has decided to halt the Go To Travel campaign before the year-end holiday season, clouding the near-term economic outlook.

The average growth forecast of 35 private economists was -5.37% for this fiscal year and +3.42% for fiscal 2021, according to a survey by the Japan Center for Economic Research. The Bank of Japan board expects real GDP this fiscal year to be -5.5% and real GDP for fiscal 2021 to be +3.6%.