IMF Cuts Japan's 2019 Growth Forecast to 0.8 Pct
Washington, Nov. 25 (Jiji Press)--The International Monetary Fund on Monday downgraded its real-term growth forecast for the Japanese economy for 2019 to 0.8 pct from the 0.9 pct as of October, taking into account the fallout from the U.S.-China trade war.
In a statement to conclude its annual economic review on Japan, the Washington-based institution said that there was no major last-minute demand before the Oct. 1 consumption tax hike from 8 pct to 10 pct in the country while warning, "Downside risks have increased," in an apparent reference to the U.S.-China trade friction and slowing world economic growth.
In order to prevent the economy from losing momentum, Japan should consider continuing to take stimulus measures in 2020 and, if needed, in 2021, the IMF said, showing concern that the Japanese government may tighten its fiscal stance after the end of a series of ongoing measures designed to mitigate negative impacts from the tax hike.
At the same time, the IMF reiterated the importance of Japan continuing efforts to improve its fiscal health. Pointing to the country's increasing fiscal burdens, such as ballooning social security costs reflecting its aging society, the IMF said, "The consumption tax rate would need to increase gradually to 15 pct by 2030 and to 20 pct by 2050."
The Bank of Japan's accommodative monetary policy stance "should be maintained" to help shore up economic activities and prices in the nation, the IMF said. The central bank aims to raise year-on-year consumer inflation to 2 pct.
[Copyright The Jiji Press, Ltd.]