Bank of Japan lowers annual growth estimate on Covid pressures

The Bank of Japan revised down its annual growth forecast yesterday and maintained its ultra-loose monetary policy as the pandemic continues to weigh on the world's third-largest economy.

In its quarterly report on prices and the economy, the central bank predicted growth of 3.4 percent for the year to March 2022.

That is down from its previous forecast of 3.8 percent.

"Downward pressure stemming from COVID-19 is likely to remain on service consumption," the bank said in its report.

"And exports and production are expected to decelerate temporarily due to supply-side constraints.

"Thereafter, however, with the impact of COVID-19 waning gradually, mainly due to widespread vaccination, the economy is likely to recover."

And reflecting this more positive longer-term outlook, the bank revised up its growth forecast for the fiscal year to March 2023 – to 2.9 percent from the previous estimate of 2.7 percent.