The Japanese government on Thursday upgraded its growth forecast for the domestic economy in fiscal 2022 to a real 3.2 percent from the previously estimated 2.2 percent, expecting the pace of recovery from the coronavirus pandemic-caused slump to pick up following a weaker-than-anticipated improvement in the current year.
The projected pace of growth in gross domestic product, the total value of goods and services produced in the nation, will be used as the basis for the government's tax revenue estimates as it draws up the draft budget for fiscal 2022 starting April, which Prime Minister Fumio Kishida's Cabinet is set to approve on Friday.
The initial budget is expected to total around 107.6 trillion yen ($950 billion), a record high for the 10th straight year, according to government sources.
Due to the prolonged economic fallout from the pandemic on the back of repeated resurgences of infections, the office cut the GDP growth rate projection for the current fiscal year from 3.7 percent to 2.6 percent.
The government had originally estimated Japan's GDP in 2021 would return to its prepandemic level in the October-December period of 2019, but the goal will likely be pushed back to March, a government official said.
The size of GDP in real terms in fiscal 2022 is expected to reach a record 556.8 trillion yen, topping the previous high of 554.3 trillion yen in fiscal 2018, according to the official.
The GDP growth forecast for the next fiscal year is slightly higher than the average 3.0 percent increase estimated by private-sector economists in a survey earlier this month by the Japan Center for Economic Research.
In nominal terms, unadjusted for inflation, the world's third-largest economy will likely expand 3.6 percent to a record 564.6 trillion yen in fiscal 2022, upgraded from an earlier projection of 2.5 percent, the government said.
Private consumption, which accounts for more than half of the Japanese economy, is expected to increase 4.0 percent in the next fiscal year, unchanged from the previous estimate.
Capital expenditure is now estimated to rise a real 5.1 percent, higher than the July forecast of a 4.2 percent expansion.
Exports in fiscal 2022 are forecast to climb 5.5 percent, following expected growth of 11.4 percent in fiscal 2021, benefiting from the global economic recovery.