[TOKYO] Japan's government is preparing a projection of real economic growth of around 1.5 per cent in the next fiscal year after marking its first economic contraction this year since the global financial crisis, sources told Reuters on Wednesday.
The government projection compared with a forecast of 1.4 per cent growth issued in July, and is in line with the Bank of Japan's growth estimate published in October.
The government's forecast provides the basis for its economic policies, including its annual budget plan for the next fiscal year, which will be decided on Jan. 14.
Government officials with knowledge of the matter said the economy probably suffered its first contraction in five years this fiscal year, hit hard by a sales tax hike in April.
The economy is expected to recover in the next fiscal year, helped by falling oil prices, added the officials, who asked not be named as they were not authorised to speak to the media.
The government is also set to forecast nominal growth of 2.7 per cent in the next fiscal year, which will help its tax revenues hit a 24-year high of 54.5 trillion yen (US$457.45 billion), the sources said.