Against this backdrop, Japan’s economy is likely to shift from the phase of recovery to expansion; namely, the output gap is expected to turn positive (excess demand).
In fiscal 2017, the real GDP growth rate is projected to maintain positive growth of 0.3 percent, although with a slowing in its pace to around a level somewhat below the potential growth rate, reflecting the effects of a front-loaded increase and subsequent decline in demand prior to and after the consumption tax hike as well as the cyclical developments in the economy. II.