JAPAN’S main economic ministers were cautiously optimistic yesterday that the world’s third-largest economy is picking up from the COVID-induced slump thanks to stimulus spending, though the situation is severe with downside risks.

Addressing the opening session of parliament, Economy Minister Yasutoshi Nishimura said Japan’s economy would grow 4 percent in real terms and 4.4 percent in nominal terms in the coming fiscal year, bringing gross domestic product back to pre-pandemic levels.

The projections appeared rosier than private-sector analysts’ estimates, and the recent declaration of a state of emergency in Tokyo, the capital, and 10 other major regions raised the spectre of a double-dip recession this year.

“We will do the utmost to defeat deflation and revive the economy to meet the projections,” Nishimura said in a speech.

With the industrial world’s heaviest public debt in mind, the ministers told parliament that they would strive to revive the economy and restore public finances simultaneously, while putting making coronavirus response a top priority.

“We will strive to achieve both economic revival and fiscal reform in order to bring the primary budget balance to a surplus in fiscal 2025,” Finance Minister Taro Aso told parliament.

The primary budget, which excludes new bond sales and debt servicing costs, serves as a key gauge of fiscal health, but the coronavirus stimulus spending made the target even more elusive. (SD-Agencies)