Economic Forecast for FY 2003 -- The Recovery Stalls as Economic Growth Slows to 0.1%

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Economic Forecast for FY 2003 -- The Recovery Stalls as Economic Growth Slows to 0.1%

25/11/2002

the Economic Research Dept.

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Growth to Slow from 1.0% in FY02 to 0.1% in FY03 as External Demand Wanes

External demand， the driving force behind Japan's modest recovery， will wane before capital investment can gain momentum. As a result， the economy is likely to peak out.
The economy will achieve real growth of 1.0% in fiscal 2002， but slow to 0.1% in fiscal 2003 due in part to mounting deflationary pressure from the disposal of bad loans. With prices still declining， nominal growth will remain negative at -0.6% in fiscal 2002 and -1.2% in fiscal 2003.
To prevent the economy's downward spiral， we need a supplementary budget in the present fiscal year and stronger anti-deflation measures in the next fiscal budget. Deficit spending growth is thus inevitable.

the Economic Research Dept.

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