IMF Trims Japan's Growth Outlook
November 24 2019 - 11:08PM
RTTF2
The International Monetary Fund downgraded its growth projection
for Japan and urged the government to take fiscal policy that
supports near-term growth and stimulate price momentum.
According to the concluding statement of the 2019 Article IV
mission to Japan, the country's economy is set to expand 0.8
percent this year, which was slower than the previous forecast of
0.9 percent.
For 2020, real GDP growth is projected to slow to 0.5 percent,
as external demand remains soft and dampens export-related
investment.
At the same time, headline consumer price inflation is projected
to continue its slow upward trend towards - but still below - the
Bank of Japan's 2 percent target. The lender sees downside risks to
this outlook, namely, sharper-than-expected global slowdown and
heightened uncertainty, durability of domestic demand and rising
financial stability risks.
The BoJ's accommodative stance needs to continue to support
reflation and growth, the IMF said.
Fiscal policy should be supportive to protect near-term growth
and promote inflation momentum, the report said. Beyond the
short-run, a clear commitment to long-term fiscal sustainability is
essential, the lender added.
Further, IMF called for a gradual increase in sales tax to 15
percent by 2030 and to 20 percent by 2050, so as to finance aging
costs. The rate of taxation on capital gains should be gradually
increased to 30 percent, starting in 2022, the lender said.
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