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TOKYO (MNI) – Economists have revised down their GDP and CPI forecasts for
both fiscal 2012 and 2013 for the fourth straight month while continuing to
project near-zero economic growth in fiscal 2014, the latest monthly survey by
the Japan Center for Economic Research released on Friday showed.

The organization polled 40 economists and research institutes from Nov. 26
to Dec. 3 for its ESP Forecast Survey, and 40 answered on the growth and
inflation outlook and 38 on the BOJ’s monetary policy stance.

The previous survey was conducted from Oct. 25 to Nov. 1.

In the near term, economists expect GDP for the October-December quarter of
2012 (data due out on Feb. 14) to contract an annualized 0.53%, revised down
further from their previous average forecast for a 0.10% drop.

That would be the second consecutive contraction in GDP after a 0.9% drop
or an annualized -3.5% in July-September as the global slowdown has depressed
exports and production.

As for fiscal 2012 ending March 31, 2013, economists on average forecast
GDP will grow only 0.81%, revised down further from +1.16% forecast in the
previous survey.

Economists on average project a 1.37% rise in GDP in fiscal 2013, revised
down from +1.40% projected the previous month.

For fiscal 2014, economists see a low 0.17% rise in GDP, unchanged from
their forecast last month.

The survey showed that the average forecast for core CPI (excluding
perishables) in fiscal 2012 was -0.15% y/y, revised down further from -0.11%
forecast in the previous survey.

Economists on average expect core consumer prices to show a 0.08% rise in
fiscal 2013, down from +0.10% predicted the previous month. This would still be
the first y/y gain since +1.2% in fiscal 2008 but far below the Bank of Japan’s
1% inflation target.

They forecast that the core inflation reading will mark a 2.31% increase in
fiscal 2014, revised down from +2.36% projected last month. These forecasts are
based on the government’s plan to hike the 5% sales tax to 8% in April 2014.

The survey also showed that 34 economists predict further monetary easing
by the BOJ, either in December or January, up from 31 last month.

Meanwhile, only four economists expect the BOJ to start unwinding its
monetary easing, in November 2013 or later, down from eight in the previous
survey.

At its latest meeting on Nov. 19-20, the BOJ’s policy board voted
unanimously to leave the scale of its financial asset-buying fund at Y91
trillion. In October the board decided to raise the target of asset purchases
for the second month in a row, citing grower downside risks to a recovery from
the economic slump and deflation.

–MNI Tokyo Bureau; tel: +81 90-4670-5309; email: msato@mni-news.com

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