The economy, after continuing to grow in the first half of fiscal 2004, will hit a wall in the latter half of the year, most private-sector research institutes predict.

Combined forecasts of real economic growth rate by nine of the nation's leading think tanks average at 2 percent for fiscal 2004, down from the 2.6 percent they project for this fiscal year.

On average, they expect the economy to shrink 0.08 percent on a nominal basis in fiscal 2004, down from the 0.06 percent growth projected for fiscal 2003.

The institutes' predictions of 2.4 percent growth or more in fiscal 2003 are rosier than the 2.1 percent growth in real terms predicted by the Cabinet Office in September.

Expansion will continue in the first half of next fiscal year, many institutes forecast, due to sustained capital spending and rising exports stemming from a recovery in the U.S. economy.

The anticipated downturn in the Japanese economy in the latter half of the fiscal year will come as a result of a slowdown in the U.S. economy, the yen's appreciation against the dollar, and capital investment peaking as companies' restructuring efforts start to lose their effectiveness, according to Mitsubishi Research Institute.

Mitsubishi forecasts real economic growth of just 1.4 percent in fiscal 2004.(IHT/Asahi: November 27,2003) (11/27)