IMF Forecasts 1.4% Growth In Japanese Economy This Year
According to the latest forecast by IMF officials, the Japanese economy will grow by 1.4% in 2023, which is 1% higher than 2022's GDP growth.
The reason behind this improvement in GDP growth is attributed to a boost in consumption and the removal of pandemic restrictions. According to IMF, these factors will allow the Japanese economy to grow at a higher-than-expected pace.
In addition, IMF also mentioned that the accommodative policies of Japan are helping to underpin growth in the economy. The BoJ has already introduced big fiscal spending along with an ultra-loose monetary policy to support the citizens from rising living costs.
Japan's Growth In Line With Other Advanced Economies
The forecast for Japan's GDP during 2023 is similar to the 1.5% average growth estimated by IMF officials for other advanced economies.
In 2024, the growth in Japan (3rd largest economy) will slow down and reach around 1.0%. For that, IMF cites that the past stimulus measures' effect will run out and cause Japan's economy to run out of steam.
The recent IMF projection comes at a time when the BoJ's meeting is also expected to conclude within a few days. This meeting will provide an update on the economic progress as well as quarterly projections set by the central bank. In addition, the meeting will also reveal whether the economy has achieved a 2% inflation target or not!
For the most part, growth in the Japanese economy is fueled by the stimulus measures introduced by the BoJ. The moment these measures are undone, we will see a drop in Japan's GDP. In fact, the fall will also translate into the stock market as well and will likely lead to a bigger crisis.
In the near term, Japan's economy will likely enjoy a little boost thanks to the BoJ policies. But to set up the economy for long-term growth, a fundamental shift will be required.