TOKYO (MNI) – The International Monetary Fund revised up its
forecast for Japan’s GDP contraction this year to -0.5% from -0.7%
projected three months ago while revising down its 2012 growth estimate
to +2.3% from +2.9%.
The IMF said in its semi-annual World Economic Outlook that the
widely expected rebound in Japan’s economy next year is due to
investment in rebuilding the northeastern Pacific coast regions battered
by the March earthquake disaster.
But the IMF also expects deflation to continue in Japan at least
through 2012, forecasting CPI declines by 0.4% this year and 0.5% next
year.
Earlier this month IMF researchers defended their earlier proposal
that Japan must quickly embark on fiscal reform by raising the 5% sales
tax, starting next year, despite high uncertainty about global growth
and the threat of the high yen.
IMF officials have argued that a moderate sales tax hike would
boost Japan’s long-term growth prospects and that Tokyo must take
advantage of a solid rebound in the economy next year.
tokyo@marketnews.com
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