Physical Address
304 North Cardinal St.
Dorchester Center, MA 02124
TOKYO (Kyodo) — Japan’s nominal gross domestic product will top 600 trillion yen ($4.2 trillion) in fiscal 2024 for the first time, a target set by the government about a decade ago, a Cabinet Office estimate showed Thursday, expecting income growth to outpace inflation.
After higher import costs of energy and raw materials boosted prices of everyday goods, inflation will ease to 2.5 percent in fiscal 2024 from 3.0 percent this year. Income growth per capita, meanwhile, will accelerate to 3.8 percent from 2.4 percent, helped by the government’s planned temporary tax cut, according to the office.
The release of the forecasts came as the government plans to formalize a draft budget for fiscal 2024 from April on Friday.
Japan’s nominal GDP, at 566 trillion yen in fiscal 2022, is projected to grow to 597 trillion yen in the current fiscal year, with a further increase to 615 trillion yen in fiscal 2024, according to the office.
The government has unveiled plans to provide 70,000 yen handouts to low-income families and a 40,000 yen tax cut per person as part of inflation relief measures. It will also offer tax incentives to firms raising wages.
Prime Minister Fumio Kishida has been stepping up calls for firms to support the upward trajectory of wages, fearing that Japan will let the chance slip to “completely break with deflation” that has plagued the nation for years.
Bank of Japan Governor Kazuo Ueda has struck a cautious tone over the prospect of attaining the central bank’s 2 percent inflation target “stably and sustainably,” saying he wants to see more data to ensure a virtuous cycle of wage and price hikes is in place.
Japan’s economy registered its first contraction in four quarters in the July-September quarter due largely to sluggish domestic demand, but economists expect it to recover in the current quarter to December.
The Cabinet Office said the world’s third-largest economy will receive support from strength in domestic demand, such as private consumption and capital spending, in fiscal 2024.
GDP, the total value of goods and services produced, is forecast to expand 3.0 percent in nominal terms and 1.3 percent in inflation-adjusted terms, slower than 5.5 percent and 1.6 percent for fiscal 2023, respectively.
In 2015, the government set a goal of attaining 600 trillion yen in nominal GDP by around fiscal 2020, as part of the “Abenomics” economy-boosting program that entailed fiscal stimulus and powerful monetary easing.
Market expectations are heightening that the BOJ will shift toward policy normalization by ending its negative rate and yield curve control, both introduced in 2016 to support economic growth and attain stable inflation.
English