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Economy

Japan GDP to contract mid-4% range in FY2020: government

COVID forces outlook lower than during 2008 financial crisis

The Japanese economy is taking a hit from the coronavirus outbreak.    © Reuters

TOKYO -- Japan expects its economy to shrink mid-4% range for fiscal 2020, Nikkei has learned.

The revised projection for real gross domestic product marks a significant downward revision from the prospect of 1.4% growth planned by the cabinet at the start of the year, highlighting the economic damage caused by the new coronavirus. The figure exceeds the 3.4% decline in GDP in fiscal 2008, when the economy was hit by the global financial crisis.

A new projection will be presented during the upcoming Economic and Fiscal Advisory Council. The cabinet approves in January the economic outlook for the next fiscal year, and reviews it around July to reflect current economic indicators.

The coronavirus started spreading in Japan from February, severely hurting business and the movement of people.

Real growth for fiscal 2021 is expected to be in the mid-3% range, driven by balancing prevention of the contagion with more robust economic activity.

This is the first time the government will provide an economic forecast for 2021.

The government had aimed for 600 trillion yen in nominal GDP this year, but will likely not see it until around 2023.

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