In the outlook for economic activity and prices report, BoJ noted that the economy is “likely to continue growing at a pace above its potential in fiscal 2018.” For 2019 and 2020, “the economy is expected to continue on a expanding trend supported by external demand. Ex-fresh food CPI continued to show “relatively weak developments” when excluding the effects of energy prices.

Below are the updated economic forecasts of BoJ:

  • Forecast of fiscal 2018 real GDP was raised to 1.6%, up from January’s estimate of 1.4%.
  • Forecast of fiscal 2019 real GDP was raised to 0.8%, up from 0.7%.
  • Forecast of fiscal 2020 real GDP was at 0.8%
  • Forecast of fiscal 2018 core CPI was lowered to 1.3%, down from 1.4%.
  • Forecast of fiscal 2019 core CPI (ex sales tax hike) was unchanged at 1.8%
  • Forecast of fiscal 2020 core CPI was at 1.8%.

BoJ also highlighted four major risks to the outlook. First is overseas developments including US economic policies and Brexit. Secondly is the impacts of the planned consumption tax hike in October 2019. Third is change in firms and households medium- to long-term growth expectations. Fourth is fiscal sustainability in the medium term to long term.

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There re also three main risks identified to price developments. First is change in firms and households medium- to long-term inflation expectations. Second is items’s prices that are not response to output gap. Third is the developments in exchange rates and commodity prices.

Here is the full report.


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