25/11/2002

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

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

 

  1. 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.

     

  2. 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.

     

  3. 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.

     

 

 

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