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Home demand to drive Japan growth Home demand to drive Japan growth
(about 2 hours later)
Domestic demand will fuel economic growth in Japan in the next financial year, its government has said.Domestic demand will fuel economic growth in Japan in the next financial year, its government has said.
The economy is forecast to expand by 2% in the 12 months from April 2008, although the government warned that a US slowdown could jeopardise this.The economy is forecast to expand by 2% in the 12 months from April 2008, although the government warned that a US slowdown could jeopardise this.
However, Economy Minister Hiroko Ota said that in the current financial year, Japan would see GDP growth of 1.3% - lower than previously forecast. However, government minister Hiroko Ota said that in the current financial year, Japan would see GDP growth of 1.3% - lower than previously forecast.
The Bank of Japan is this week expected to peg interest rates at 0.5%.The Bank of Japan is this week expected to peg interest rates at 0.5%.
Lacklustre growth and lingering deflationary pressures in the world's second largest economy mean that the bank is expected to refrain from raising its key rate until the latter half of 2008, analysts say.Lacklustre growth and lingering deflationary pressures in the world's second largest economy mean that the bank is expected to refrain from raising its key rate until the latter half of 2008, analysts say.
Mr Ota said that while domestic demand would be playing a key role in boosting the nation's economy, growth in consumption would be limited because "wage increases will likely continue to be moderate". Mrs Ota said that while domestic demand would be playing a key role in boosting the nation's economy, growth in consumption would be limited because "wage increases will likely continue to be moderate".
He also warned that if the slowdown in the US - Japan's largest export market - continued then next year's growth "may be lower than the projection". She also warned that if the slowdown in the US - Japan's largest export market - continued then next year's growth "may be lower than the projection".
Higher crude oil prices could also have an impact, Mr Ota said. Higher crude oil prices could also have an impact, Mrs Ota said.