In the Outlook for Economic Activity and Prices, BoJ said the economy is “likely to remain in severe situation for the time being” due to the impact of the coronavirus pandemic. GDP could shrink as much as -5.0% to -3.0% in fiscal 2020. Japan could also return to deflation with core CPI down -0.7 to -0.4%. BoJ added that “future developments are extremely unclear” and risks to both economic activity and prices are “skewed to the downside”.
GDP growth forecast:
- Fiscal 2019 at -0.4% to -0.1% (down from 0.8% to 0.9%).
- Fiscal 2020 at -5.0 to -3.0% (down from (0.8 % to 1.1%).
- Fiscal 2021 at 2.8% to 3.9% (up from 1.0% to 1.3%).
- Fiscal 2020 at 0.8% to 1.6%.
Core CPI forecast (excluding sales tax hike effects):
- Fiscal 2019 at 0.4% (vs 0.4% to 0.5%).
- Fiscal 2020 at -0.7% to -0.4% (down from 0.9% to 1.0%).
- Fiscal 2021 at 0.0% to 0.7% (down from 1.2% to 1.6%).
- Fiscal 2022 at 0.4% to 1.0%.
