Japan's economy likely to continue recovering moderately: Central bank

Thereafter, as a virtuous cycle from income to spending gradually intensifies, Japan's economy is projected to continue growing at a pace above its potential growth rate, the central bank noted in its latest economic outlook.

The year-on-year (YoY) rate of increase in the consumer price index (CPI, all items less fresh food) is likely to be above 2 per cent across fiscal 2023-24, mainly due to the remaining effects of a pass-through to consumer prices of cost increases led by the past rise in import prices and the effects of the recent rise in crude oil prices.

The rate of increase in the CPI in the next fiscal is projected to decelerate owing to dissipation of these effects.

On risks to the outlook, there are extremely high uncertainties surrounding the country’s economic activity and prices, including developments in overseas economic activity and prices, developments in commodity prices, and domestic firms' wage- and price-setting behaviour.

Risks to economic activity are generally balanced for fiscal 2022-23 and 2023-24, but are skewed to the downside for fiscal 2024-25. Risks to prices are skewed to the upside for fiscal 2022-23.

ALCHEMPro News Desk (DS)