Japan boosts economic growth outlook for the current fiscal year amid strong external demand

Posted on December 26, 2023   |  

The government has slightly increased its predictions for economic growth this fiscal year, now expecting a 1.6% real growth rate, up from the earlier estimate of 1.3%.

External demand, driven by a rebound in inbound tourism and higher automobile production, contributes significantly, adding 1.4 percentage points to the overall growth.

Economic growth is anticipated to dip to 1.3% in the next fiscal year (beginning in April), with a slight increase from the previous estimate of 1.2%.

The projection includes a predicted rebound in domestic demand for the next fiscal year, supported by planned income tax cuts and ongoing wage hikes.

Consumer prices are forecasted to increase by 3.0% this fiscal year, accounting for energy subsidies that reduce inflation by 0.6 percentage points.

Inflation is expected to ease to 2.5% in the following fiscal year as the impact of energy subsidies diminishes.

Nominal gross domestic product (GDP) is set to rise by 5.5% this fiscal year and 3.0% in the next, reaching a record ¥615 trillion ($4.29 trillion) in fiscal 2024.