Japan to forecast real GDP will shrink around 4.5% in FY2020: Nikkei

[TOKYO] The Japanese government will forecast real gross domestic product (GDP) contracted around 4.5 per cent for the fiscal year to March 2021, revising its pre-coronavirus projection for a 1.4 per cent expansion, the Nikkei business daily reported on Wednesday.

The world's third-largest economy is seen recovering in the current quarter after an expected sharp slump in April-June as the coronavirus crisis put the brakes on global growth and Japan's state of emergency prompted people to stay at home and businesses to close.

For the next fiscal year from April 2021, the government will forecast real GDP growth of around 3.5 per cent as efforts to manage the spread of the coronavirus and economic activity will be balanced, according to the report.

The government has set a target to raise Japan's nominal GDP to 600 trillion yen (S$7.87 trillion) by around 2020 but it will be delayed to around 2023, the report said.

The government's economic outlook is more optimistic, especially of the current year, than projections made by others as stimulus steps to respond to the coronavirus crisis were accounted for, it said.

Japan has so far pledged to spend a combined US$2.2 trillion in two stimulus packages to combat the heavy blow from the pandemic.

A Reuters poll has forecast the economy will contract 5.3 per cent this fiscal year and expand 3.3 per cent next fiscal year.

REUTERS