BoJ revises 2021 growth lower, 2022 growth higher
The Bank of Japan stated after its Board meeting on Friday that it is downgrading the growth rate for 2021 due to the impact of COVID-19 from a median of 4% to 3.8%. However, the projections for 2022 were increased from 2.4% to 2.7%. CPI expectations for this year went up from 0.1% to 0.6%, and were raised slightly from 0.8% to 0.9% for 2022, “mainly due to higher energy prices.”
The economic activity is “expected to be lower than that prior to the pandemic for the time being” but likely to recover and continue growing “with a virtuous cycle from income to spending intensifying.” The year-on-year CPI is likely to remain around 0% in the short term, gradually increasing later. However, the bank warned the outlook for economic activity and inflation is “highly unclear, since it could change depending on the consequences of COVID-19 and their impact on domestic and overseas economies,” although it was based on the premise that growth expectations “will not decline substantially.”
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