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ESP Forecast: Private sector has harsh view on Japan’s economic outlook

  • 2016-01-14 15:00:00
  • , Sankei
  • Translation

(Sankei: January 14, 2016 – p. 11)

 

 On Jan. 13, the Japan Center for Economic Research (JCER) released its January ESP Forecast, a monthly survey of 41 economic analysts at private institutes in Japan. The real GDP growth rate in FY2016 is predicted to be 1.44% year-on-year. This is a downward revision from last month’s 1.51% and reflects increasing concerns over the Chinese economy. This forecast is below the 1.7% figure in the government’s economic forecast, which was approved by the Cabinet last December. The ESP Forecast throws into relief the private sector’s harsh view on the economy.

 

 The survey period for the January ESP Forecast is Dec. 25, 2015, through Jan. 5, 2016. The JCER calculated the averages for key items based on predictions received from analysts. The nominal GDP growth rate for FY2016 is predicted to be 2.02%, slightly lower than the 2.05% in the December ESP Forecast. The forecast for real GDP growth in FY2017, for which a formal survey was conducted for the first time, is low, 0.06%, in light of the fact that consumption may be sluggish with the increase in the sales tax to 10% in April that year.

 

 Because the upcoming sales tax increase is 1% smaller than the 3% (5% -> 8%) hike in April 2014, it is thought that the drop in real GDP in reaction to the hike will be milder than in 2014. The government plans to consider economic measures to mitigate the impact at this year’s meetings of the Council on Economic and Fiscal Policy.

 

 The ESP Forecast envisions real GDP grew at an annual rate of 0.63% in the Oct.–Dec. quarter of 2015, which would signify positive growth for the second consecutive quarter. The real GDP growth rate for FY2015 is predicted to be 1.05%.

 

 The core consumer price index (all items except fresh food) is forecast to be only about 1% due to low crude oil prices. Twenty-two analysts responded that the 2% inflation target eyed by the Bank of Japan “is not achievable.”

 

 The unemployment rate is expected to remain at the same level. The Nikkei Stock Average is forecast to return to the 20,000 yen level in and after 2016.

 

Forecast Averages for Key Indicators

FY2015

FY2016

FY2017

GDP

Real

1.05%

1.44%

0.06%

Nominal

2.46%

2.02%

1.54%

Core CPI (year-on-year)

0.11%

0.82%

1.13%

Unemployment rate

3.30%

3.16%

3.12%

Wage growth (year-on-year)

0.40%

0.70%

0.90%

Nikkei Stock Average

19,416 yen

20,473 yen

20,791 yen

* Core CPI does not include fresh foods or the impact of the consumption tax hike. Nikkei Stock Averages are business day averages. Wages are pay less excess labor in the Monthly Labor Survey.

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