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Economy

Japan raises 2021 GDP forecast to around 4% growth

Government puts faith in new steps to ease impact of pandemic

The Japanese government expects the economy to rebound sharply in fiscal 2021. (Photo by Takuya Ikeda)

TOKYO -- Japan has forecast a rise of around 4% in the country's gross domestic product for fiscal 2021, up from its prediction of 3.4% growth in July, Nikkei has learned.

The upward revision comes after the government came up with additional measures to lessen the impact of the coronavirus pandemic.

The government puts growth for fiscal 2020 at about minus 5%, lower than its previous prediction of a 4.5% contraction, due to the rising number of COVID-19 cases.

The cabinet will approve the latest forecast soon. The government announces the next fiscal year's economic outlook at the end of the year and estimates tax revenue, drafting the following year's budget based on the forecast.

If the prediction is correct, fiscal 2020 will be Japan's first full year of economic contraction since World War II. The Tokyo Olympics are expected to be held next year and fiscal 2021 is forecast to record the country's strongest growth since 1990.

According to a survey by the Japan Center for Economic Research, the average growth forecast of 35 private economists was minus 5.37% for this fiscal year and 3.42% for fiscal 2021. The Organization for Economic Cooperation and Development predicted a 5.3% fall in Japan's GDP for fiscal 2020 and 2.3% growth next year in its economic outlook released Dec. 1.

Yasutoshi Nishimura, the minister leading the pandemic response, said the government will strive to boost the virus-hit economy to its pre-pandemic level by the January to March quarter of 2022. The government drew up the new economic outlook, taking Nishimura's target into account.

Japan is seeing an explosion of COVID-19 cases and infections are still rising overseas as well. In Japan, consumption has again started falling, especially in service sectors such as restaurants and travel.

The government has decided to halt the Go To Travel campaign before the year-end holiday season. A further rise in coronavirus caseloads will cloud the economic outlook.

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