BOJ likely to cut GDP forecast for FY 2009 to contraction of 3% range

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TOKYO, April 24 Kyodo -
The Bank of Japan is considering downgrading its estimate of the country's
economic performance in the current fiscal year from an earlier estimated 2.0
percent contraction to a bigger shrinkage in the range of 3.0 percent, sources
close to the matter said Friday.
The earlier prediction the central bank gave in January was already to be the
worst postwar negative growth. But in view of the deepening recession, the
central bank plans to revise it downward, they said.
The new estimate in terms of gross domestic product will be included in its
biannual report of economic and price prospects to be adopted in its policy
meeting next Thursday.
The Japanese government is also expected to announce next Monday its
revised-down GDP forecast for fiscal 2009 at a worst-ever 3.3 percent
contraction.
The government and the central bank appear to share a severe view of the
nation's economy and intend to take accommodative measures to prevent further
downturn, they said.
The government is scheduled to release its industrial output data early
Thursday before the BOJ releases the economic outlook. If the key gauge for the
future output trend shows much worse than expected, the BOJ may further lower
its GDP forecast for fiscal 2009 to a contraction in the 4 percent range, the
sources added.
The BOJ is also considering lowering its GDP forecast for fiscal 2010 from 1.5
percent growth in its January estimate as the favorable effects of the
government's additional economic stimulus measures are likely to be exhausted
in fiscal 2009.
As for consumer price conditions, the BOJ is also expected to lower its
forecast for the consumer price index excluding volatile perishables prices due
to falling demand amid the weakening economy.
In January, the BOJ predicted the CPI will fall 1.1 percent in fiscal 2009 from
the previous year and drop 0.4 percent in fiscal 2010.
==Kyodo