Japan: 8 years in a row the government expected more growth than came
Japan: real GDP growth by fiscal year, the government outlook and the outcome
Fiscal 2018 to 2025, the pandemic included: 2020, +1.4% expected, −3.7% came. But over 45 years the misses go both ways: growth above the outlook 17 times, below 27.
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Every December–January the Japanese cabinet approves an economic outlook for the next fiscal year (April–March): growth, prices, unemployment. The budget is built on it.
By fiscal year: blue, the growth the government’s outlook expected for that year; orange, the outcome in today’s data. The shading is the error.
- Fiscal 2018: outlook → first estimate → now
+1.8% → +0.6% → +0.6%
- Fiscal 2019: outlook → first estimate → now
+1.3% → −0.1% → −0.9%
- Fiscal 2020: outlook → first estimate → now
+1.4% → −4.6% → −3.7%
- Fiscal 2021: outlook → first estimate → now
+4.0% → +2.1% → +3.8%
- Fiscal 2022: outlook → first estimate → now
+3.2% → +1.2% → +1.5%
- Fiscal 2023: outlook → first estimate → now
+1.5% → +1.2% → +0.1%
- Fiscal 2024: outlook → first estimate → now
+1.3% → +0.8% → +0.7%
- Fiscal 2025: outlook → first estimate → now
+1.2% → +0.8% → +0.9%
One outlook per fiscal year: the last before it begins (the cabinet decision of December or January; before 1998 the cabinet figures from the Economic Planning Agency head’s speech to the Diet; before 1993 the outlook was for GNP). Outcome: ESRI (Cabinet Office), latest data; 1981–1994 ESRI’s backcast to the 2015 base. A run: consecutive years missed the same way by more than 0.05 percentage points.
The run was found by looking at the data and by itself proves no lean: over 45 years growth came in above the outlook 17 times and below 27 (sign test p = 0.17). Against first estimates since 1998 the outlook was higher 20 times in 28: revisions of GDP make some misses vanish or appear.
A question for this picture
Is a government outlook an expectation, or a target the budget is built around?