TOKYO (MNI) – In the face of high global uncertainty, economists
have revised down their forecasts for Japan’s economic growth next year,
predicting price drops at least through early 2013, the latest monthly
survey by the Cabinet Office’s Economic Planning Association released on
Thursday showed.

The association polled 42 economists and research institutions from
Aug. 25 to Sept. 1, with 40 answering on the growth and the inflation
outlook and 39 on the BOJ’s monetary policy stance.

The previous survey was conducted from July 28 to Aug. 4.

While foreseeing a sharp 4.95% rebound in annualized real GDP in
the July-September quarter from a 1.3% slump in Q2 and the 3.6% plunge
in Q1, economists on average now see much slower below-3% growth in Q4
of 2011, down from above 4% projected in the previous survey.

Their average forecast has been revised up to 0.38% for fiscal 2011
from 0.23% but that for fiscal 2012 has been revised down to 2.40% from
2.87%.

On the price front, economists expect deflation to continue through
at least early 2013 (the farthest they are asked to forecast) as the
year-on-year change in CPI has been pushed down by the new data formula
adopted last month.

The government has updated the CPI base year to 2010 from 2005 and
reviewed the basket of goods and services used for calculating the main
consumer price measure.

The survey showed that the average forecast for core CPI (excluding
perishables) in fiscal 2011 was little changed at -0.19% on year,
compared with -0.18% projected in the previous survey, while the
forecast for fiscal 2012 was revised up to -0.20% from -0.26%.

The economists polled predicted on average that the year-on-year
drop in core CPI will bottom at -0.35% in April-June 2012 and gradually
recover to -0.04% in January-March 2013.

They expect prices to be unchanged with a slight negative bias in
the July-September quarter this year, improving from -0.3% in
April-June.

The survey also showed about half of the economists — 23 vs. 22
last time — still predict a further credit easing by the Bank of Japan
in the coming months.

Meanwhile, the number of the economists who expect the BOJ to start
unwinding its powerful monetary easing in the second half of next year
decreased to 16 from 19.

tokyo@marketnews.com
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