Govt expects 1.5% growth in FY2023

Jiji Press

17:02 JST, December 22, 2022

TOKYO (Jiji Press) — The government on Thursday adopted an official projection that the country’s gross domestic product in fiscal 2023, starting next April, will grow 1.5% from the previous year in price-adjusted real terms.

In the economic outlook, endorsed at the day’s round-robin-style cabinet meeting, the government revised up its GDP growth estimate from the 1.1% forecast in July this year, in anticipation that a comprehensive economic package compiled by the government to fight inflation would shore up the economy.

For the next fiscal year, the government predicts Japan’s real GDP to hit a record high of ¥558 trillion, against the previous high of ¥554 trillion marked in fiscal 2018.

Private-sector economists, however, have adopted a more conservative projection, expecting a 1% growth in real GDP on average.

The government’s newest economic outlook will be used to compile the government’s tax revenue estimate in its fiscal 2023 budget proposal.

In nominal terms, the government predicts a GDP growth of 2.1%.

Under the fiscal 2023 economic outlook, the government expects personal consumption, the main pillar of domestic demand, to grow 2.2% in real terms, against its fiscal 2022 growth estimate of 2.8%. As the prediction is based on the assumption that the country’s real wages will go up in fiscal 2023, Japan’s consumption may turn out to be weaker if many companies choose not to increase wages during “shunto” wage negotiations next spring.

Exports are forecast to rise 2.4%, and corporate capital expenditures are predicted to increase 5.0%.

For fiscal 2022, the government revised down its real GDP growth projection to 1.7% from its July projection of 2.0%, reflecting soaring energy and food prices and a global economic slowdown.

The government also expects Japan’s overall consumer price index, including fresh food prices, to increase 1.7% in fiscal 2023 and 3.0% in fiscal 2022.