Japan's economy will grow for the first time in three years in the year to March 2011 as stimulus boosts domestic demand, the government said on Friday in budget forecasts, but it added that the Bank of Japan should support the economy as mild deflation will persist.
The government forecast gross domestic product would grow a real 1.4% in fiscal 2010-11 after contracting 2.6% in the current year to March 2010.
Overall consumer prices will fall 0.8% in 201011, slower than a 1.6% decline estimated for 200910, the government said.
The government said it would work with the central bank to defeat deflation and it expected the Bank of Japan to support the economy in line with the government's policies.
Prime minister Yukio Hatoyama's cabinet, which approved the forecasts on Friday, will use the figures when compiling next fiscal year's budget.
Following is a table of the Japanese government's economic forecasts in percent:
FY 201011FY 200910
Real GDP
+1.4-2.6
Nominal GDP+0.4-4.3
(in real terms)
FY 201011FY 200910
Private consumption+1.0+0.6
Private housing+4.4-16.9
Private capex+3.1-16.5
Contribution to GDP
External demand+0.4-0.5
Domestic demand+1.1-2.2
Private demand+1.3-3.2
Private inventories+0.1-0.4
Public demand-0.2+1.0
Overall CPI-0.8-1.6
GDP deflator-1.0-1.7
Jobless rate5.35.4
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