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Will Japan's tax hike hurt? Government and economists disagree

Official outlook sees 1.2% growth in fiscal 2020, but outsiders say 0.5%

The Cabinet Office sees consumer spending increasing 1% in fiscal 2020, compared with private-sector forecasts averaging 0.3%.   © Reuters

TOKYO -- Japan's first official economic forecast for fiscal 2020 paints a significantly rosier picture than private-sector predictions as the government downplays concerns ahead of a consumption tax hike this October.

Real gross domestic product will increase by 1.2% in fiscal 2020, the Cabinet Office said Monday. It foresees improvements in employment and pay, as well as stable consumer spending and capital investment. The government forecast projects nominal growth at 2% given the effect a higher consumption tax would have on prices.

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