Japan changes growth to measure

Story link: Japan changes growth to measure

As the Japanese government recalculates how GDP is calculated, the Bank of Japan (BoJ) has been forced to consider downgrading economic growth forecasts for 2005.

Attempting to account more effectively for deflation, using a method known as chain linking, the Japanese government’s re-calculations of GDP required a revision in expected growth for 2005 from 3.2% to 2.0%.

However, the Bank of Japan has not yet announced any final decision as to how it will factor the new measurement of deflation into its own forecasts.

Meanwhile, the increased cost of oil prices forced nearly a fifth reduction in account surplus for November 2004 in comparison to November 2003. Although Japanese exports are improving, the governor of the Bank of Japan, Toshihiko Fukui, has warned of weaknesses in the industrial sector.