Japan predicts 2.2 per cent growth

13 July 2012 – AAP –

The Bank of Japan (BoJ) says it expects the country’s economy to expand by 2.2 per cent in the fiscal year to the end of March 2013 and has held off ushering in fresh stimulus.

Today’s forecast from the BoJ, which kept interest rates and a Y70 trillion ($A858 billion) asset-purchase program unchanged after a two-day policy meeting, was slightly lower than its April outlook of 2.3 per cent growth.

The central bank kept its 1.7 per cent growth forecast for the next fiscal year unchanged, but warned that uncertainty in overseas markets, including Europe and the United States, could be a drag on Japan’s economic recovery.

“Japan’s economic activity has started picking up moderately as domestic demand remains firm, mainly supported by reconstruction-related demand” after last year’s quake-tsunami disaster, it said in a statement.

“(But) there remains a high degree of uncertainty about the global economy, including the prospects for the European debt problem …(and) the momentum toward a recovery for the US economy”.

The bank’s decision not to usher in further stimulus may surprise some dealers who had expected new policy measures after interest rate cuts last week by the European Central Bank and China’s central bank.

Brazil yesterday cut its rate to a record low, while today South Korea’s central bank unexpectedly cut its key interest rate for the first time in more than three years.