Japan Set to Record Highest GDP Growth in Over a Decade Following Stimulus Budget Bump

The growth forecast for Japan has gotten bumped up from the 2.2% GDP growth forecast made in July to 3.2% in 2022, following a record additional stimulus budget approved by the Japanese parliament last week. If achieved, this growth would be the fastest growth since 2010, when the Asian nation’s economy recorded a 3.3% growth after the global financial meltdown.

According to reports, Japan’s stimulus spending will increase by 1.5% this fiscal year and 3.6% next fiscal year. However, the Japanese government slashed its forecast for this fiscal year’s GDP to 2.6%, which ended in March from 3.7% in the previous fiscal year.

Japan Economy Better Off with Weaker Yen

Meanwhile, Japan suffered an annualized contraction of 3.6% in Q3 2021, following a resurgence of COVID-19 infections that affected private consumption, a key contributor to Japan’s GDP.

The Yen fell against the dollar on Thursday as the USD/JPY tapped a 4-week high at 114.51, following a bullish close by the Japanese Nikkei Stock Index. The Yen suffered an additional bearish pressure from the release of the BoJ’s October meeting minutes, which noted that the Yen’s weakness is healthy for the overall standing of the economy.

The Yen also showed weakness against the euro on Thursday, as the EUR/JPY continued on its upwards journey for the third consecutive day.