TOKYO (Reuters). Japan on Thursday upgraded its growth projections starting April. Officials from Cabinet Office said that the country expected the gross domestic product (GDP), to surpass a record despite risks from Omicron and supply limitations.

After a projection of 2.2% real GDP growth at mid-year reviews in July, the growth projection for fiscal 2022 was increased to 3.2%. It was helped by an unprecedented extra stimulus budget which parliament has approved.

This would mark the fastest economic growth since the end of fiscal 2010, when the economy experienced a 3.3% increase in response to the global financial crisis. Officials stated that the stimulus spending would increase GDP by 1.5% and 3.6% this fiscal year.

The government has sharply downgraded Japan’s actual GDP to 2.6% for the fiscal year that ended in March, from 3.7% in February. This is due to the long-running COVID-19 pandemic as well as supply limitations in chip manufacturing.

These factors led to the government predicting that the return of the economy to pre-pandemic levels would be delayed until the fiscal year ends next March, rather than the earlier forecast of December.

A Cabinet Office official stated to reporters that the economy is showing signs of recovery. Therefore, it was important to maintain current momentum for a sustainable economic recovery.

We are not yet at autonomous growth, but we make steady progress towards generating a virtuous circle of wealth distribution and growth.

On Thursday, Prime Minister Fumio Kishida approved the revised forecasts. These forecasts will form the basis of Friday’s fiscal 2022 budget.

Japan is the third-largest economy in the world. It contracted 3.6% per year during the quarter ending July/September. The result of a rise of COVID-19 case, which has caused a significant drag on private consumption. Private consumption makes up nearly half of Japan’s GDP.

Japan is behind many advanced countries in exiting crisis mode stimulus. This has kept policymakers under constant pressure to keep pursuing aggressive fiscal stimulus and monetary stimulation.