According to Japan’s government, the world’s second-largest economy will recover to pre-pandemic levels by the end of 2021. The government announced that Japan’s economy is helped by solid exports and consumer spending, supported by progress in vaccinations.
The government now anticipates that during the fiscal year to end-March, the economy will expand 3.7%. Remarkably, the figure is down 0.3% from the previous estimate that the Cabinet approved in January. The Cabinet’s office announced at a meeting of the Council on Economic and Fiscal Policy that real gross domestic product (GDP) will surpass the 547 trillion yen ($4.9 trillion) recorded in October-December 2019.
The forecasts show a weaker expansion than the government’s January estimate of 4.0% growth for this fiscal year. However, that is largely due to a smaller-than-anticipated 4.6% contraction for Japan’s economy in fiscal 2020.
Previously, the government announced that GDP would recover this fiscal year, ending in March 2022.
According to Prime Minister Suga Yoshihide, GDP will surpass pre-pandemic levels this year and hit a record high next fiscal year.
He also added that vaccinations could help speed up the normalization of economic activities and make further economic growth possible. Suga announced that the government would do all to fasten the vaccination process and vaccinate as many people as possible.
Growth for the next fiscal year is likely to slow to 2.2% as the pace of exports moderates. However, projections show that robust domestic demand will boost GDP to a record 558 trillion yen.
Japan is currently lagging behind the United States, Britain, and many European countries in vaccinations. Increasing infection numbers have forced Japan to maintain a quasi state of emergency curbs weeks before the Tokyo Olympic Games.
Consumption tax revenue gained 14.3%, while corporate tax revenue surged 4.1%
On Monday, the Finance Ministry announced that Japan’s tax revenue in fiscal 2020 surged 4.1% from a year earlier to a record 60.82 trillion yen ($549 billion).
According to the ministry, corporate tax revenue also helped lift overall revenue.
Consumption tax revenue increased by 14.3% from the previous year to 20.97 trillion yen. It hit 20 trillion yen and became the largest component, for the first time since the tax introduction in fiscal 1989 at a rate of 3%,
Corporate tax revenue surged 4.1% to 11.23 trillion yen on the back of high profits mainly earned by the manufacturing sector. Income tax revenue boosted by 0.1% to 19.19 trillion yen.
For fiscal 2021 through next March, the government anticipated tax revenue to 57.45 trillion yen.