Two government sources said that the Japanese government is likely to reduce its forecast for economic growth for the 2025 fiscal year (through March 2025) by 0.3%, to 1.0%, given the impact of the weakening yen on import prices and consumption. In addition, GDP growth forecasts for the current fiscal year are also expected to decrease - now forecasts suggest growth of 0.8%.
The sources added that the rising cost of living will put pressure on consumption for longer than initially expected. However, the updated forecasts will still be higher than private sector estimates, reflecting the government's hopes that higher wages and increased fuel subsidies will lead to increased consumer spending. The results of the latest survey by the Japan Center for Economic Research showed that economists expect the economy to expand by 0.44% this fiscal year.
The government publishes its economic growth forecasts in January and then revises them sometime around July.