In the Outlook for Economic Activity and Prices, BoJ said, “the economy is likely to recover” with as impact of COVID-19 wanes gradually. Thereafter, it is projected to “continue growing with a virtuous cycle from income to spending intensifying”.
GDP growth forecasts were revised higher, “on the back of stronger domestic and external demand”. CPI forecast for fiscal 2021 was lowered “due to the effects of reduction in mobile phone charges”. But outlook is “highly unclear”. The assumption that impact of COVID-19 will “almost subside” in the middle of the projection period “entail high uncertainties.
In the new economic projections, Fiscal 2021 GDP forecast was raised slightly to 4.0%, up from January’s 3.9%. Fiscal 2022 GDP forecast was raised to 2.4%, from 1.8%. GDP growth is projected to to slow to 1.3% in fiscal 2023.
CPI forecast was downgraded to 0.1% in 2021, from 0.5%. But for fiscal 2022, CPI forecast was upgraded to 0.8%, from 0.7%. CPI is projected to rise further to 1.0% in fiscal 2023.
