Japanese government revised up its expectations for economic growth this fiscal year on Tuesday, as solid exports, as well as consumer spending supported by progress in vaccinations, are set to drive the economy back to the pre-pandemic levels by the end of this year.
Key takeaways
“The government now forecasts that during the fiscal year to end-March, the economy will expand 3.7% and at some point real gross domestic product (GDP) will exceed the 547 trillion yen ($4.9 trillion) marked in October-December 2019.”
“Japan’s recovery will be moderate in the first half of this fiscal year but accelerate in the latter half due to steady gains in exports and capital expenditure,”
“There would also be a pickup in services spending.”
“Growth for the next fiscal year is expected to slow to 2.2% as the pace of exports moderates.”
Market reaction
USD/JPY is attempting a tepid bounce from two-week lows of 110.39, although remains 0.11% lower on the day, courtesy of the risk-off mood and falling Treasury yields.
Meanwhile, rising infection numbers have forced Japan to maintain “quasi” state of emergency curbs weeks before the Tokyo Olympic Games begin on July 23.
