ID :
13555
Wed, 07/23/2008 - 12:44
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https://oananews.org//node/13555
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Gov't downgrades FY 2008 real growth projection to 1.3%
TOKYO, July 23 Kyodo - The Cabinet Office on Tuesday downgraded its projection for real economic growth in fiscal 2008 from 2.0 percent as of January to 1.3 percent amid worsening business conditions caused by surges in crude oil prices, the U.S.
economic slowdown and the yen's appreciation against other major currencies.
The office also trimmed its estimate for the country's nominal economic growth for the current fiscal year to 0.3 percent from the 2.1 percent forecast in January, as domestic prices were slow to increase despite soaring import pricesof oil and grains.
The growth rates are shown in gross domestic product terms. Nominal economicgrowth rates fall below real rates when the economy is in a deflationary state.
The drops of 0.7 percentage point and 1.8 points in the fiscal 2008 real and nominal growth projections are the largest since the Cabinet Office beganreleasing revised estimate figures in the summer of 2002.
For the current fiscal year through next March, the office lowered its estimate of the GDP deflator, which reflects general price movements, from 0.1 percentin January to minus 1.0 percent.
A Cabinet Office official said the downward revision in the real growth estimate reflects weaker-than-expected corporate capital spending, housinginvestment and private consumption.
Reflecting spikes in crude oil import prices, the office boosted its projectionfor consumer price increases to 1.7 percent from 0.3 percent in January.
In December last year when the office calculated the initial estimates, it assumed that crude oil import prices would average $83.0 per barrel in fiscal2008. But the average oil price was raised to $127.3 per barrel this time.
Economic and Fiscal Policy Minister Hiroko Ota presented the Cabinet Office's latest economic outlook at a meeting of the key policy-setting Council onEconomic and Fiscal Policy headed by Prime Minister Yasuo Fukuda.
The Cabinet Office presents revised projections every summer based on its owncalculations, reflecting the latest economic developments.
Ota told a news conference after a council meeting that panel members pointed out that the current sharp rises in crude oil and other commodity prices are ''not a temporary phenomenon'' because they reflect growing demand fromemerging economies.
The panel members said that Japan needs to change its economic structure to adapt to new price systems through such measures as further promotingenergy-saving efforts and streamlining distribution systems, according to Ota.
Meanwhile, four private-sector members of the economic panel with business and academic backgrounds submitted their estimate of Japan's macroeconomic conditions in fiscal 2009 starting next April, forecasting a real 1.6 percentgrowth from fiscal 2008.
The four projected that Japan will post 1.7 percent nominal growth in fiscal2009, with the country expected to conquer deflation.
The estimates were based on the assumption that the Japanese corporate sectorwill recover with the improvement in global economic conditions.
Concerning Japan's fiscal condition, the Cabinet Office estimated in its fresh mid-term projection that Japan will not be able to achieve a budget surplus in fiscal 2011 on a primary balance basis at the national and local levels withoutfresh measures.
The office forecast that the combined primary balance deficit of national and local governments will amount to 3.9 trillion yen in fiscal 2011, up from 700billion yen estimated in January.
A primary balance surplus will be achieved when outlays other than debt-servicing costs are covered by revenues without relying on fresh debtissuance.
The government has set the goal of bringing the primary balance into the black in fiscal 2011. To do so, it aims to cut its expenditures by up to 14.3trillion yen in the five-year period through fiscal 2011.
But accomplishing the goal under the current state of the economy would require either conducting deeper cuts in expenditures or boosting revenues via suchsteps as a consumption tax hike.
Panel members reaffirmed that the government ''should never ditch'' its goal of realizing a primary balance surplus in fiscal 2011 and should implement measures to boost the country's economic growth and increase tax revenues tomeet the target, according to Ota.
==Kyodo
economic slowdown and the yen's appreciation against other major currencies.
The office also trimmed its estimate for the country's nominal economic growth for the current fiscal year to 0.3 percent from the 2.1 percent forecast in January, as domestic prices were slow to increase despite soaring import pricesof oil and grains.
The growth rates are shown in gross domestic product terms. Nominal economicgrowth rates fall below real rates when the economy is in a deflationary state.
The drops of 0.7 percentage point and 1.8 points in the fiscal 2008 real and nominal growth projections are the largest since the Cabinet Office beganreleasing revised estimate figures in the summer of 2002.
For the current fiscal year through next March, the office lowered its estimate of the GDP deflator, which reflects general price movements, from 0.1 percentin January to minus 1.0 percent.
A Cabinet Office official said the downward revision in the real growth estimate reflects weaker-than-expected corporate capital spending, housinginvestment and private consumption.
Reflecting spikes in crude oil import prices, the office boosted its projectionfor consumer price increases to 1.7 percent from 0.3 percent in January.
In December last year when the office calculated the initial estimates, it assumed that crude oil import prices would average $83.0 per barrel in fiscal2008. But the average oil price was raised to $127.3 per barrel this time.
Economic and Fiscal Policy Minister Hiroko Ota presented the Cabinet Office's latest economic outlook at a meeting of the key policy-setting Council onEconomic and Fiscal Policy headed by Prime Minister Yasuo Fukuda.
The Cabinet Office presents revised projections every summer based on its owncalculations, reflecting the latest economic developments.
Ota told a news conference after a council meeting that panel members pointed out that the current sharp rises in crude oil and other commodity prices are ''not a temporary phenomenon'' because they reflect growing demand fromemerging economies.
The panel members said that Japan needs to change its economic structure to adapt to new price systems through such measures as further promotingenergy-saving efforts and streamlining distribution systems, according to Ota.
Meanwhile, four private-sector members of the economic panel with business and academic backgrounds submitted their estimate of Japan's macroeconomic conditions in fiscal 2009 starting next April, forecasting a real 1.6 percentgrowth from fiscal 2008.
The four projected that Japan will post 1.7 percent nominal growth in fiscal2009, with the country expected to conquer deflation.
The estimates were based on the assumption that the Japanese corporate sectorwill recover with the improvement in global economic conditions.
Concerning Japan's fiscal condition, the Cabinet Office estimated in its fresh mid-term projection that Japan will not be able to achieve a budget surplus in fiscal 2011 on a primary balance basis at the national and local levels withoutfresh measures.
The office forecast that the combined primary balance deficit of national and local governments will amount to 3.9 trillion yen in fiscal 2011, up from 700billion yen estimated in January.
A primary balance surplus will be achieved when outlays other than debt-servicing costs are covered by revenues without relying on fresh debtissuance.
The government has set the goal of bringing the primary balance into the black in fiscal 2011. To do so, it aims to cut its expenditures by up to 14.3trillion yen in the five-year period through fiscal 2011.
But accomplishing the goal under the current state of the economy would require either conducting deeper cuts in expenditures or boosting revenues via suchsteps as a consumption tax hike.
Panel members reaffirmed that the government ''should never ditch'' its goal of realizing a primary balance surplus in fiscal 2011 and should implement measures to boost the country's economic growth and increase tax revenues tomeet the target, according to Ota.
==Kyodo
