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Japanese government cut forecast for economic growth and inflation

The Japanese government cut forecast for economic growth and inflation and started planning of new stimulus package to support the delaying economy. The gross domestic product (GDP) of Japan will expand by only 0.9% in the fiscal year, which began in April. For comparison, the previous estimate published in January was for growth of 1.7%. Moreover, according to the forecasts of the government the inflation will be only 0.4%, compared to the earlier expectation of 1.2%.

Prime Minister Shinzo Abe ordered his ministers to prepare a fiscal stimulus package. According to one of his advisers it should be for at worth at least 20 trillion JPY (192 billion USD).

This week, the JPY fell and stocks rose, as the markets await the decision on the size of the package. The speculations continue in the direction that actions will be coordinated with the Bank of Japan, which is meeting this month. Japan must leave open options, including to have a coordinated action between the government and the central bank.

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