Japan raises economic growth forecast for next fiscal year

Japan raises economic growth forecast for next fiscal year
The Japanese government kept its estimated 0.9 percent growth for the current fiscal year ending in March 2020. (AFP)
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Updated 18 December 2019

Japan raises economic growth forecast for next fiscal year

Japan raises economic growth forecast for next fiscal year
  • Economy is now expected to expand 1.4 percent in price-adjusted real terms in the fiscal year starting April 2020
  • Government keeps estimated 0.9 percent growth for the current fiscal year ending in March 2020

TOKYO: Japan’s government raised its economic growth forecast for the next fiscal year, helped by an expected boost from a $122 billion fiscal package that would help cushion the hit from weaker global demand.
The economy is now expected to expand 1.4 percent in price-adjusted real terms in the fiscal year starting April 2020, according to the Cabinet Office’s projections, approved by the Cabinet on Wednesday.
That marked an upgrade from the government’s previous forecast of 1.2 percent growth issued in July. The government kept its estimated 0.9 percent growth for the current fiscal year ending in March 2020.
The upgrade largely stemmed from an improvement in domestic demand due to stronger corporate investment and a boost to growth from public spending from the fiscal package approved by the Cabinet this month.
The government expects capital spending to grow a robust 2.7 percent next fiscal year, compared to 1.9 percent in the previous assessment in July. Public demand was seen adding 0.5 percentage point to GDP growth in fiscal 2020, up from 0.2 percentage point seen previously.
The boost from the fiscal package is expected to more than offset weakness in external demand as slowing global growth threatens to leave a deeper mark on the economy.
The government expects a 0.1 percentage point drag from external demand next fiscal year, compared to a positive 0.2 percentage point contribution seen previously.
The downgrade largely stems from a weaker rebound in exports, which the government sees expanding at a pace of 2.4 percent next fiscal year, down from 4.3 percent seen previously.
The government’s projections come as the Bank of Japan is expected to keep monetary policy on hold on Thursday as the fiscal package and progress in US-China trade talks take some immediate pressure off the central bank to support growth.
The Cabinet Office projected overall consumer inflation, which includes volatile fresh food and energy costs, at 0.6 percent for this fiscal year and 0.8 percent for the following year — remaining far from the BOJ’s elusive 2 percent price target.
Japan’s economy expanded at an annualized 1.8 percent in the third quarter because of stronger consumer and business spending, but analysts expect a contraction in the current quarter due to the increasing external and internal pressures.
Weighing on the outlook are a slowdown in China’s economy and a nationwide sales tax hike in October, which appears to have hit private consumption harder than policymakers initially thought.
The Cabinet Office said private consumption will grow just 0.6 percent in fiscal 2019, down from 0.9 percent seen in the previous assessment in July, due to a decline in consumer sentiment and lower summer bonuses.
For fiscal 2019 and fiscal 2020, the Cabinet Office forecast nominal economic growth of 1.8 percent and 2.1, respectively. Higher nominal growth estimates point to government expectations for greater tax revenue.


Careem welcomes Saudization of ride-hailing sector, eyes further investment

Careem welcomes Saudization of ride-hailing sector, eyes further investment
Updated 16 January 2021

Careem welcomes Saudization of ride-hailing sector, eyes further investment

Careem welcomes Saudization of ride-hailing sector, eyes further investment
  • Careem said the company had been affected by the pandemic because workers stayed at home and cut down on their travel

DUBAI: Ride-hailing service Careem has welcomed a government decision to fully localize the sector in the Kingdom, saying the move will help to create more jobs for Saudi drivers.

The Saudi Ministry of Transport said the new rule would have limited impact as citizens already made up 96 percent of the workforce in the ride-hailing sector.

“We are proud that over 100,000 Saudi nationals are finding income-earning opportunities with Careem each month,” a Careem spokesperson told Arab News. “We’ve worked hand-in-hand with the Transport General Authority and Ministry of Human Resources and Social Development to help the Kingdom achieve its ambitious agenda, and applaud the efforts the government is making to support Saudis working in the ride-hailing sector.”

The spokesperson added that Careem planned to continue investing in the Kingdom with a greater range of transportation and delivery services. 

Although Careem did not give specific numbers for its operations in Saudi Arabia, it said it had 33 million registered users in 13 countries across the region and operated in 28 Saudi cities.

Ibrahim Manna, managing director of global markets at Careem, said the company had been affected by the pandemic because workers stayed at home and cut down on their travel.

“COVID-19 has impacted our ride-hailing, starting in March,” he told Arab News. “This is a natural result of lockdowns, curfews and other limitations of movement, changing user behavior and habits in daily life.”

But while the ride-hailing service decreased, food delivery demand soared.

“Delivery was one of the big growth levers,” he added. “Due to the change in the daily lives and needs of the customer, we adapted quickly and provided them with what they needed most. We partnered up with many stores, pharmacies and restaurants, in order to deliver essentials to citizens in Saudi Arabia during a difficult time.”

On Thursday Mueed Al Saeed, assisting vice president of Land Transport Regulation of the Public Transport Authority, said there were 16 companies including Careem licensed to operate ride-hailing services in the Kingdom.

He also said 300 million trips had been carried out during the past three years, and that there were 250,000 drivers actively working for these services.