The Japanese government revised up its economic forecasts for the fiscal year ending next March and predicted that growth would accelerate next year, based on the view that its huge stimulus package will boost consumption and capital spending.
These forecasts are the first under the administration of Prime Minister Sanae Takaichi, who has announced big spending plans aimed at cushioning the impact of the rising cost of living on households, while promoting investment in growth areas.
According to the latest forecasts approved by the cabinet, the government expects the Japanese economy to grow 1.1% in the current fiscal year, compared to 0.7% estimated in August, because the impact of US tariffs has been less than expected.
Growth is expected to accelerate to 1.3% in fiscal 2026 as strong consumption and capital spending will offset weak foreign demand, according to forecasts.
The government expects consumption to rise 1.3% next fiscal year, at the same pace forecast for fiscal 2025, as tax breaks and moderating inflation support household spending.
Capital spending is likely to increase 2.8% in fiscal 2026, faster than the estimated 1.9% increase for the current fiscal year, due in part to the effect of subsidies and tax breaks aimed at promoting investment.
