Japan has lowered its economic growth forecast for 2012 as a cumulative effect of a rising yen, natural disasters and the eurozone debt crisis.
The Japanese government stated that the economy will expand at 2.2 percent in the fiscal year 2012, which is lower than the previous forecast for 2.7 to 2.9 percent growth. At the same time, the goverment sounded optimistic that the European sovereign debt crisis will ease next year. International trade and finance have been badly affected by the eurozone debt crisis, which has been threatening to pull down global economic growth.
The Cabinet of Prime Minister Yoshihiko Noda approved the revised estimates while projecting that Japan will face a trade deficit for fiscal 2011.
The government has stated that the March 11 earthquake and tsunami have seriously damaged the nation's economic activities for the current fiscal year. The economy picked up after the supply chain rebuilt itself quickly, the government stated.
But after summer, the recovery has slowed due to a quickly rising yen and the global economic slowdown brought about by the European sovereign debt crisis, it added. The strong yen and Europe's sovereign debt crisis have severely hurt the exports of the country.
In addition, unemployment is expected to stay close to 4.5 percent in fiscal 2011 and 4.3 percent in fiscal 2012.