TOKYO, July 30 (Xinhua) -- The Japanese government on Thursday cut its economic growth outlook to 0.9 percent for the current fiscal year, down from an earlier estimate of 1.3 percent, as higher crude oil prices posed risks to resource-poor Japan.
In its mid-year estimates, the Cabinet Office said the weaker outlook for this fiscal year ending March 2027 came as the yen's depreciation against the U.S. dollar and higher oil prices linked to the conflict in the Middle East squeezed household spending and corporate profits.
The latest forecast said that the government expects the yen to trade at 161.4 against the U.S. dollar, which is much weaker than the projected 155.2 in January.
The forecast also said that crude oil prices will rise to 92.5 U.S. dollars per barrel, surging from the previous estimate of 68 dollars.
However, gross domestic product growth is forecast to expand 1.1 percent for the 2027 fiscal year starting next April on the back of strong capital expenditures and private consumption, according to the Cabinet Office.
In its latest primary balance projections, the Cabinet Office expects a larger deficit of 1.2 trillion yen (about 7.3 billion U.S. dollars) in fiscal year 2026, up from the 800 billion yen deficit projected in June, as the government needed to fund a supplementary budget for the year.
The primary balance, which is calculated by subtracting spending from tax and other revenues, excluding government bond interest payments, is a key indicator of fiscal health. Japan's primary balance has been in deficit for most of the postwar era, resulting in a vast debt pile more than twice the size of its economy. ■
