Japan may cut CPI, growth estimates in midterm report
The Japanese government is leaning towards cutting its mid- to long-term gross domestic product and inàation estimates in its outlook report due in January, to factor in a more realistic scenario of economic growth, government sources told Reuters.
The government currently projects nominal economic growth will reach as much as 3.9 percent for the ¿scal year ending March 2021, compared with 1.1 percent growth last ¿scal year. It has estimated annual consumer inàation will be stable around two percent from ¿scal 2021.
But a growing number of of¿cials see those levels as dif¿cult to achieve, and the consumer inàation forecast would likely be lowered to 1.5 percent, the sources said on condition of anonymity because the report is not yet public.
That conàicts with the Bank of Japan’s target of around 2.0 percent consumer inàation in around ¿scal 2019, which the central bank has been struggling to achieve despite more than four years of massive stimulus under Governor Haruhiko Kuroda.
In September, the core consumer price index rose 0.7 percent compared with the same month last year.
In considering a cut to the GDP estimate, government of¿cials are also worried that overly optimistic growth projections could lead to a further worsening of Japan’s ¿nances.
That’s because budgets would be based on those rosy assumptions but there wouldn’t be enough tax revenue if such growth failed to materialize, the sources said.