The latest Reuters poll of 32 economists showed on Friday, the Japanese economy is likely to contract sharply and suffer mild deflation this fiscal year, in the light of the devastating impact of the coronavirus pandemic and US-China tensions.
“The economy is forecast to shrink 5.6% in the current fiscal year to next March, more than a 5.3% contraction projected last month. In a worst-case scenario it will shrink 8.0%.
The downgrade came as many analysts revised their forecasts for April-June gross domestic product (GDP) to a 27% contraction – last month’s worst-case forecast – from a nearly 24% drop projected in July.
Japan’s economy will grow just 3.3% in the following year beginning in April 2021, the Aug. 4-13 poll showed, unchanged from the previous poll in July.
Core consumer prices, which exclude volatile fresh food but includes energy costs, will fall 0.3% this fiscal year and rebound just 0.2% next year.
Over 80% of respondents also said Japanese companies would face adverse effects if Washington and Beijing move toward creating their own economic zones, which would mark a retreat of globalization.”