- Japan's economy is expected to grow above its potential rate, driven by moderate overseas economic growth and a virtuous cycle from income to spending, supported by accommodative financial conditions.
- The CPI (excluding fresh food) is projected to increase by around 2.5% in fiscal 2024, and around 2% in fiscal 2025 and 2026, with underlying inflation gradually rising due to an improving output gap and higher inflation expectations.
- Compared to previous projections, the real GDP growth rate for fiscal 2024 is slightly lower due to a statistical revision of 2023 GDP figures. CPI growth for fiscal 2024 is lower due to government measures lowering energy prices, but higher for fiscal 2025 as these measures fade.
- High uncertainties remain regarding Japan's economic activity and prices, including developments in global economies, commodity prices, and domestic wage- and price-setting behavior. Exchange rate fluctuations are increasingly likely to impact prices.
- Risks to economic activity are tilted to the upside for fiscal 2025, and risks to prices are skewed to the upside for fiscal 2024 and 2025.
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