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

The organization polled 40 economists and research institutes from
Sept. 25 to Oct. 2 for its ESP Forecast Survey, and 40 answered on the
growth and inflation outlook and 39 on the BOJ’s monetary policy stance.

The previous survey was conducted from Aug. 27 to Sept. 3.

In the near term, economists expect GDP for the July-September
quarter of 2012 (data due out on Nov. 12) to post an annualized 0.31%
drop, revised down sharply from their previous average forecast for a
1.47% rise.

That would be the first drop in five quarters after +0.7% in Q2 and
+5.3 in Q1 as the global slowdown and fading effects of fiscal stimulus
are hurting exports and production.

Japan’s economy last contracted by 1.3% in April-June 2011 and
tumbled 7.9% in the previous quarter hit by the earthquake disaster.

The latest ESP forecast showed that the average economist forecast
for Q4 GDP was also revised down further to +0.37% from +0.62% in the
previous survey.

As for fiscal 2012 ending March 31, 2013, economists on average
forecast GDP will grow 1.71%, revised down from +2.08% forecast in the
previous survey.

Economists on average project a 1.54% rise in GDP in fiscal 2013,
revised down slightly from +1.62% projected the previous month.

In their first forecast for fiscal 2014, economists see only a
0.32% rise in GDP.

The survey showed that the average forecast for core CPI (excluding
perishables) in fiscal 2012 was -0.08% y/y, revised down from -0.06%
forecast in the previous survey.

Economists on average expect core consumer prices to show a 0.11%
rise in fiscal 2013, down from +0.14% predicted the previous month. This
would still be the first y/y gain since +1.2% in fiscal 2008.

They forecast that the core inflation reading will mark a sharp
2.38% increase in fiscal 2014, thanks to a planned hike in the 5% sales
tax to 8% in April 2014.

The survey also showed that 29 economists predict further monetary
easing by the Bank of Japan in coming months, mostly in October or
December, up slightly from 28 last month.

Meanwhile, 10 economists expect the BOJ to start unwinding its
monetary easing, mostly in about a year ahead, unchanged from the
previous survey.

tokyo@mni-news.com
** MNI Tokyo Newsroom: 81-3-6860-4820 **

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