TOKYO (Kyodo) -- Japan's recently sealed free trade pacts with 10 Pacific Rim countries and with the European Union will increase real gross domestic product by an estimated 13 trillion yen ($114 billion) and create 752,000 jobs by boosting exports and investment, the government said Thursday.
The estimated combined effects of the Trans-Pacific Partnership and the trade agreement with the European Union, both expected to be implemented as early as 2019, would be equivalent to 2.5 percent of fiscal 2016 real GDP.
But the government estimates production in the agriculture, forestry and fishery sector will fall by up to 260 billion yen in fierce price competition with low-cost imports.
The government led by Prime Minister Shinzo Abe aims to introduce steps to strengthen the heavily protected agricultural sector to maintain domestic farmers' income and production levels.
But observers are skeptical about the effects of such government efforts as the trade deals could have a bigger impact on the farm sector.
The trade pacts will play a large part in Abe's economic growth strategy to help make up for Japan's shrinking domestic market amid a declining population.
"The pacts will not just provide a temporal boost for demand but will enhance Japan's growth power continuously," Economic and Fiscal Policy Minister Toshimitsu Motegi, who doubles as minister in charge of TPP negotiations, told reporters. "I believe the pacts will push our country's economy rigorously."
The latest estimates put the two pacts on par with the 13.6 trillion yen boost that the government estimated would result from the initial TPP deal agreed by 12 countries including the United States. The world's biggest economy decided to leave the deal after President Donald Trump took office in January.
Growth is expected to be driven by exports and investment to be facilitated by the removal or lowering of tariffs and new rules to liberalize trade set under the free trade agreements.
Of the 13 trillion yen in the latest estimate, around 7.8 trillion yen will come from the TPP and the rest from the Japan-EU free trade agreement.
As for the estimated new job creation, the TPP is expected to contribute 460,000 jobs and the trade agreement with the European Union 292,000 jobs.
It is estimated that the Pacific Rim pact will slash Japan's agricultural, forestry and fisheries output by 90 billion to 150 billion yen and the Japan-EU pact is likely to reduce it by 60 billion to 110 billion yen.
Japan and the other 10 TPP countries agreed last month to implement the pact, representing around 18 percent of the world's GDP after the U.S. withdrawal.
The 10 countries are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. A clear schedule to bring it into effect has yet to be set.
Japan and the European Union, meanwhile, finalized their free trade negotiations this month to create a deal that would cover nearly a third of global GDP.
It is the first time that the government has estimated the impact of the Japan-EU trade pact.