Japan foresees 1st economic expansion in 3 yrs in FY2010+

TOKYO, Dec. 25 Kyodo -
The government said Friday it projects Japan's economy to grow 1.4 percent in
real terms for fiscal 2010, marking the first expansion in three years on the
back of recovering exports and its stimulus measures.
Although the nation's economy, as measured by gross domestic product, is likely
to recover from a projected 2.6 percent contraction in fiscal 2009, severe
employment conditions will remain and moderate deflation is likely to continue,
the government said.
''I believe there will be no double-dip recession'' in Japan, Finance Minister
Hirohisa Fujii told a news conference after the Cabinet approved the economic
forecast.
Fujii said Japan's growth will pick up in tandem with many strong economies in
Asia and the government's measures to be financed by a record 92.30 trillion
yen budget for fiscal 2010.
On a nominal basis, the government forecasts 0.4 percent growth for fiscal 2010
and a 4.3 percent shrinkage for the whole of fiscal 2009. The size of the
expected contraction in the current fiscal year, if realized, would be the
worst since 1955 when comparable data became available.
The government releases its projection for the nation's economic growth for the
upcoming fiscal year every December. The forecast serves as a basic target for
the government to achieve.
''The economy is expected to recover gradually in fiscal 2010,'' the government
said in a statement. ''We will continue to closely watch economic conditions,
and take decisive action when deemed necessary.''
Prime Minister Yukio Hatoyama's government is putting greater emphasis on
achieving positive growth in nominal GDP as its reading is said to be closer
than real GDP to what people actually feel about economic conditions.
The Japanese economy has already started picking up, with GDP expanding for the
second consecutive quarter through the July-September period following a
serious slump amid the global financial crisis.
Since taking office in September, the new government led by the Democratic
Party of Japan has suspended part of the extra budget crafted by the previous
government for fiscal 2009, slashing what it sees as wasteful expenditures, and
has compiled a new 7.2 trillion yen economic stimulus package.
The partial revision of the extra budget is estimated to push GDP down by 0.1
percentage point in fiscal 2010.
On the other hand, the stimulus package, including the extension of government
incentives for purchases of environmentally friendly cars and consumer
electronics, is expected to buoy the nation's GDP by 0.6 point in fiscal 2010,
the government said.
For fiscal 2010, the government is predicting that private consumption will
rise 1.0 percent on a price-adjusted basis, capital investment will gain 3.1
percent, and exports will surge 8.3 percent.
But the nation's unemployment rate is projected to fall only marginally to 5.3
percent from the estimated record 5.4 percent for fiscal 2009.
The consumer price index is projected to fall in the current fiscal year for
the first time in four years, at a rate of 1.6 percent, on the back of weak
demand and sharp falls in crude oil prices from the previous year's peak. The
CPI is expected to fall another 0.8 percent in fiscal 2010, the government
said.
Deputy Prime Minister Naoto Kan, who concurrently serves as state minister for
economic and fiscal policy, told a separate press conference it is
''regrettable'' that deflation is likely to continue in the next fiscal year as
shown in the forecast of the consumer price index.
But the government aims to end deflation by fiscal 2011 by working together
with the Bank of Japan, he said, adding, ''Although it may be difficult in the
next fiscal year...we want to make deflation zero'' in fiscal 2011.
==Kyodo