The International Monetary Fund (IMF) increased its growth and inflation forecasts for Japan in its World Economic Outlook published on Tuesday. The IMF now forecasts economic growth of 2% for Japan this fiscal year, up 0.6 percentage points from the July projection. The upward revision is attributed to factors such as pent-up consumption, a recovery in auto exports and an increase in inbound tourism.
Japanese consumer prices are also expected to rise by 3.2% in 2023 and 2.9% in 2024, exceeding previous forecasts. This persistent inflation, although lower than that in the eurozone and the US, suggests that the Bank of Japan (BOJ) may start to scale back its aggressive monetary easing program due to the high uncertainties.
The BOJ, as reported by Kyodo News, is expected to meet later this month with a likely upward revision of its price growth outlook on the agenda. The central bank currently expects inflation to peak this fiscal year before falling below the 2% target in subsequent years.
In addition to these forecasts, the IMF predicts a 2.4% increase in Japan’s GDP per capita this year, which would be the fastest pace among the Group of Seven (G-7) countries. This signals a robust recovery for the Japanese economy amid global economic uncertainty.
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