Japan's growth forecasts may be too optimistic, bank says

Associated Press

TOKYO — Japan's economy is expected to grow between 0.3 percent and 0.8 percent this fiscal year, the central bank said yesterday, suggesting that the government's growth forecasts are too optimistic.

Falling domestic prices and slowing worldwide growth are likely to hurt the economy, though global economies might recover somewhat in the second half of the fiscal year, the Bank of Japan said in a closely watched report.

"In the first half of fiscal 2001, the global economic slowdown will probably continue to depress Japan's exports and production," the report said.

The BOJ's forecast for gross domestic product — the value of all goods and services a country produces — confirms what private economists have been saying for months: that the government's 1.7 percent growth predictions for this year may be too high.

The central bank also said consumer prices are expected to fall 0.4 percent to 0.8 percent and wholesale prices are likely to decline between 0.6 percent and 0.9 percent in the fiscal year that began this month.

Earlier yesterday, the government said retail sales in Japan rose 1.6 percent in March from a year ago, reversing a decline in the previous month. But economists said the data do not represent a change in weak consumer spending trends, since gains were attributable to a rush to replace old refrigerators and washing machines before the introduction of a new law requiring consumers to pay to recycle household appliances.