TOKYO — The Bank of Japan will consider cutting its economic forecast for the current fiscal year ending in March as consumption takes a hit from state of emergency measures against the coronavirus, the Nikkei reported on Wednesday.
The central bank, however, may revise up its growth forecast for the following year in its quarterly review of its projections due out next week, the paper said.
In its current projections released in October, the BOJ expects the economy to expand 3.6% next fiscal year following this year’s estimated 5.5% contraction.
While the state of emergency will hurt spending, the BOJ expects robust exports and a boost to growth from the government’s stimulus package to ease some of the pain in the year beginning in April, sources familiar with its thinking told Reuters.
Many BOJ officials are cautious about ramping up stimulus at next week’s rate review, as steps to boost demand would run counter to government efforts to have citizens stay home, the sources said on condition of anonymity as they were not authorised to speak publicly.
Japan declared a limited state of emergency in Tokyo and three neighbouring prefectures last week to stem the spread of the coronavirus.
Prime Minister Yoshihide Suga said he is considering extending the curbs beyond Tokyo as infections continue to rise, stoking fears of a double-dip recession in the world’s third-largest economy.
Reporting by Leika Kihara; Editing by Chris Reese and Sam Holmes; Reuters