Japan cuts forecast for fiscal 2011, 2012

Japan cut its economic growth forecast for the year to March 2012 and the following 12 months, citing the impact of a soaring yen, natural disasters and the eurozone debt crisis. In a Cabinet Office report, the government said it expects Asia's second-largest economy to grow a real 2.2 percent in fiscal 2012, downgrading its previous forecast, released in August, for an expansion of between 2.7 percent and 2.9 percent. Japan Inc. will shrink 0.1 percent in the year to March 2012, the government said on Thursday, a turnaround from a projected 0.5 percent growth expected in August. The government said in the fiscal year that started in April, "the nation's economic activities were seriously damaged" by the March 11 earthquake and tsunami. The economy picked up after the supply chain rebuilt itself quickly," it said. "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." The government said it expects prices to remain stable, projecting consumer prices to rise 0.1 percent in 2012, adding to the woes of companies that have long grappled with the damaging effects of deflation.