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A
poll of roughly 40 major think tanks, conducted each month by a
semi-government body, showed on Tuesday analysts now expect the
economy will grow 1.21 percent in the year to March 2016.
That was a rare sharp downgrade from 1.66 percent projected in
the previous month's ESP survey, regarded as the most
comprehensive poll available in Japan.
It also widened the gap between private-sector views and the
BOJ's upbeat forecast last month for a 1.7 percent expansion
this year.
The world's third-largest economy likely contracted an
annualized 1.9 percent in April-June due to weak exports and
household spending, a sharp reversal from a 3.9 percent
expansion in the first quarter, a Reuters poll showed. The data
will be released on Monday.
Many analysts agree with the Bank of Japan that growth will
rebound in the third quarter as solid U.S. demand lifts exports
and Japanese households resume spending as wages rise.
But the expected dismal second-quarter reading and any weak data
over the summer will most certainly force the BOJ to cut its
outlook when it next reviews its forecasts in October, analysts
say.
"The question is how big the BOJ's downgrade will be. The BOJ
says the current weakness in consumption is temporary but it's
uncertain whether that's indeed the case," said Yuichiro Nagai,
an economist at Barclays Capital Japan.
The downgrade in forecasts has not bolstered expectations of
imminent monetary easing, partly as BOJ officials have clung to
their upbeat rhetoric despite a recent slew of weak data.
"Unless the economy suffers another contraction in the third
quarter and slides into recession, the BOJ will probably stick
to its rosy scenario and hold off on easing further," said
Barclay's Nagai.
(Reporting by Leika Kihara; Editing by Kim Coghill)
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