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BOJ likely to cut growth forecast as supply constraints hit output

The Bank of Japan is expected to downgrade its economic growth forecast for the current fiscal year as supply constraints caused by Asian factory shutdowns cripple output and exports, sources familiar with its thinking say.

The BOJ is also likely to trim its consumer inflation forecast for the year ending in March, five sources said, which would reinforce market expectations it will lag behind other central banks in whittling down crisis-mode stimulus measures.

“Upcoming data will likely show a pretty big plunge in Japanese exports and output due to factory shutdowns in Asia. That will clearly push down economic growth,” said one of the sources, who spoke on condition of anonymity as they were not authorised to speak publicly.

Manufacturers in the region have been grappling with pandemic-induced disruptions that have led to surging logistics costs and supply chain bottlenecks.

The revisions will be part of the BOJ’s quarterly growth and price forecasts due at its next policy meeting on Oct. 27-28.

Under current projections made in July, the BOJ expects the economy to grow 3.8% in the year ending in March and core consumer inflation to hit 0.6%.
Source: Reuters (Reporting by Leika Kihara; Editing by Jacqueline Wong)

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