The Bank of Japan has improved the assessment of the economy and confirmed the forecast of further moderate recovery amid intensified export growth, higher business confidence and sustainable consumption in the private sector.
However, the main parameters of the monetary policy remained unchanged: the Japanese Central Bank continues to target the yield on 10-year government bonds at a level close to zero, and the interest rate on deposits of commercial banks at the Central Bank is still at minus 0.1%, according to the reports based on the meeting of December 19-20.
The December meeting of the Bank of Japan was the first after the victory of Donald Trump in the US elections, and the Central Bank has taken into account the additional external risks in its estimates and projections, including geopolitical uncertainty and the dynamics of China and the US macroeconomic indicators.
However, Japan's Cabinet on Tuesday improved forecasts of growth of the Japanese economy. According to the government’s statement, in 2017 fiscal year, which begins on April 1, the real GDP will grow by 1.5% after 1.3% in the current year, while the nominal GDP will increase by 2.5%. The increase in prices is likely to be 1.1% in annual terms in 2017 fiscal year, while the country is experiencing deflation since March, and by the end of the current fiscal year there is expected no change.
The Japanese Finance Minister, Taro Aso, reiterated the primary budget for the next fiscal year at 97.5 trillion yen ($ 830 billion), or 0.8% more than in the current year, says Japan Today.
The same as in 2016 fiscal year, the government expects to take additional budgets in the following year when needed.
The restoring growth of consumer prices is expected to increase Japan's nominal GDP to 540 trillion yen - a new record high, above the previous peak of 533 trillion yen recorded in 1997 fiscal year. In 2017, it is expected to grow to 554 trillion yen. The Japanese Prime Minister, Shinzo Abe, has set a goal to bring the nominal GDP at 600 trillion yen by 2020.