Economic Forecasts & Data

TOKYO (Nikkei)--The nation's real gross domestic product grew 0.7% from the previous month in March, according to an estimate released Wednesday by the Japan Center for Economic Research.

The third quarter of 2012 saw real GDP shrink at an annualized rate of 0.4%, but since Prime minister Shinzo Abe's new government came to office, the overly strong yen suddenly entered a phase of correction, and stock prices began to climb. Can we now look confidently forward to a business upturn and an escape from deflation, as the market is expecting?

The growth of the Japanese economy will become slower in fiscal 2021-25 and Japan will likely record a twin deficit, meaning both the fiscal and current account balances will be in the red. Consequently, this situation may lead to a rise in interest rates and the potential risk of a sovereign debt crisis.

The Japan's growth strategies are not limited to domestic reform. The global financial framework is considered to be a substantial foundation on which the economy develops. A key reason why Japan has been suffering from a deflationary economy is the excessive appreciation of the yen. For this reason, building a framework that eliminates factors making the yen overvalued and one that can manage a future financial crisis will be an effective growth strategy.