IMF revises up Japan 2018 growth estimate

January 23, 2018

Washington- The International Monetary Fund said Monday that it expects the Japanese economy to grow 1.2 percent in 2018, up 0.5 percentage point from its previous estimate in October last year.

The new projection reflects upward revisions to external demand, a supplementary budget and carryover from stronger-than-expected recent activity, the IMF said in its latest World Economic Outlook report.

The report also revised up the Japanese economic growth estimate for 2019 by 0.1 point to 0.9 percent. But the pace will be slowest among advanced countries, according to the IMF.

The Washington-based institution also raised its estimate on 2018 global economic growth by 0.2 point to 3.9 percent, expecting the United States to lead the way thanks massive tax cuts.

For the US economy, the IMF revised up its 2018 growth forecast by 0.4 point to 2.7 percent, reflecting the tax reform program launched by the administration of U.S. President Donald Trump.

"The US tax policy changes are expected to stimulate activity, with the short-term impact in the United States mostly driven by the investment response to the corporate income tax cuts," the report said. "The effect on US growth is estimated to be positive through 2020."

"Due to the temporary nature of some of its provisions, the tax policy package is projected to lower growth for a few years from 2022 onwards," the IMF predicted.

For 2018 and 2019, growth rate forecasts "for many of the euro area economies have been marked up, especially for Germany, Italy, and the Netherlands, reflecting the stronger momentum in domestic demand and higher external demand," the IMF said.

The IMF raised its growth estimate for China for both years on brisk exports, despite concerns over a slowdown in the country's economic expansion.

Equity and other asset prices could fall if the US Federal Reserve accelerate credit tightening on the back of an overheating US economy, the IMF said, also warning that the Trump administration's inward-looking trade policy may dampen global trade activity.

The recovering global economy gives "an ideal moment to act on a range of multilateral challenges," Maurice Obstfeld, chief economist of the IMF, said.

"These include countering global financial stability threats," Obstfeld added. "Of especially urgent importance is to fight irreversible environmental damage, notably from climate change." Jiji Press