— Japan Revises FY11 Real GDP Forecast To -0.1% From +0.5%

TOKYO (MNI) – The government on Thursday forecast that Japan’s
economy will grow a real 2.2% in fiscal 2012 starting next April, up
from an estimated -0.1% in the current fiscal year.

The forecast for fiscal 2011 was revised down from an earlier
projection of +0.5% in gross domestic product, due to the aftermath of
the March 11 disaster.

The 2012 growth forecast was also revised down from the earlier
+2.7% to +2.9%.

In fiscal 2012, the economy is expected to “recover moderately” on
the assumption that turmoil in global markets caused by the European
sovereign debt crises will be stabilized and overseas economy will start
picking up.

Also, the third and fourth supplementary budgets for this fiscal
year will help push up fiscal 2012 GDP, the government said.

Amid lingering deflationary pressure, the government forecast
consumer prices will rise 0.1% in fiscal 2012 from the previous year,
after showing declines in the previous three years.

Total CPI is estimated by the government to fall 0.2% in fiscal
2011, revised upward from the previous outlook of +0.2%.

The GDP and CPI forecasts will be used for estimating how much
fiscal stimulus the government should prepare for fiscal 2012 in order
to continue fighting deflation while guiding the economy to a sustained
recovery track.

The government of Prime Minister Yoshihiko Noda will draft the
national budget for fiscal 2012 later this week and send it to
parliament for approval during its around 150-day session to be called
next month.

The Bank of Japan has already presented its own projection for the
next fiscal year, with the +2.2% median GDP forecast by its nine-member
policy board.

The BOJ board forecast the core CPI (excluding fresh food) will
rise 0.1% on year in fiscal 2012.

In the government forecast, domestic demand will contribute a 1.8
percentage points to fiscal 2012 GDP, while overseas demand will push it
up by 0.4 percentage point.

Other details in real GDP forecasts by the government:

— Private consumption: +1.1% in fiscal 2012 vs +0.3% in fiscal
2011.

— Private-sector capital investment: +5.1% vs. -1.1%.

— Housing investment: +6.3% vs. +2.9%.

The government forecasts for fiscal 2012 are based on the
assumption that the U.S. dollar will average Y77.5, imported crude oil
prices will average $113.0 a barrel, and the world economy will grow at
+3.1%.

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

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