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TOKYO (MNI) – Economists have revised up their medium-term
inflation forecasts on easing deflationary pressures as the economy is
set for a gradual recovery, the latest monthly survey by the Japan
Center for Economic Research released on Tuesday showed.

The association polled 40 economists and research institutions from
April 26 to May 8 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 March 29 to April 5.

Economists expect Japan will move out of years of price drops
following news that national CPI rose 0.2% on the year in March, showing
the highest gain since +0.2% in September 2011.

The survey showed that the average forecast for core CPI (excluding
perishables) in fiscal 2012 was put at +0.09%, up from -0.01% in the
previous survey. It would be the first annual increase in four years
since +1.2% in fiscal 2008.

Also, economists on average expect consumer prices to show a 0.20%
rise in fiscal 2013, revised up from +0.13% last month.

In the near term, economists expect GDP for the January-March
quarter of 2012 to post an annualized gain of a real 3.20%, an upward
revision from their previous average forecast for a 2.48% rise.

But the average GDP forecast for the April-June quarter was revised
down to +2.19% from +2.29% in the previous survey.

For the whole of fiscal 2011 that ended on March 31, economists on
average now forecast real GDP would show -0.19% y/y, revised up slightly
from -0.21% forecast in the previous survey.

Economists on average project a 2.15% rise in real GDP in fiscal
2012, revised up from +2.07% foreseen in the previous survey, while they
expect a 1.52% rise in fiscal 2013, revised down from their previous
forecast of +1.54%.

The survey also showed that 23 economists predict a further credit
easing by the Bank of Japan in coming months, mostly in July, up from 20
last month.

Meanwhile, 15 economists expect the BOJ to start unwinding its
monetary easing in about a year ahead, down from 17 in the previous
survey.

tokyo@marketnews.com
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