IMF trims Japan growth forecasts for 2015, next year

posted on October 7, 2015

Japan's economy will expand at a slower rate than previously forecast this year and next, the International Monetary Fund warned Tuesday, in another blow to Prime Minister Shinzo Abe's stuttering growth blitz.

The Washington-based IMF also called on authorities to work harder on slashing the country's giant national debt, which is more than twice as big as its gross domestic product (GDP).

The projections come amid fears about a sharp slowdown in the Chinese economy -- the world's second biggest and a key driver of global growth -- which has sent shudders around the planet.

The IMF estimated in its semi-annual World Economic Outlook that Japanese growth this year would hit 0.6 percent, followed by 1.0 percent expansion in 2016. That compares with projections earlier this year for 0.8 percent and 1.2 percent respectively.

"The gradual pickup reflects support from higher compensation and higher equity prices due to the Bank of Japan's additional quantitative and qualitative easing, as well as lower oil and commodity prices," the report said.

Abe unveiled a plan in April 2013 to kickstart the economy and bring an end to painful deflation with a vast government spending programme and Bank of Japan asset-buying programme -- or quantitative easing -- dubbed "Abenomics".

While the scheme showed early promise, with stocks surging and growth advancing, a recent run of weak data has raised questions about its effectiveness as consumer prices stagnate and economic growth remains torpid.

source by newsonjapan
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