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Recovery has strengthened in Japan's economy, the IMF
believes.(BBC) |
The International Monetary Fund (IMF) has raised its growth outlook
for the Japanese economy.
The Washington-based lender forecast that Japan's gross domestic
product would rise to 4.5% in 2004, topping a previous estimate of 3.4%.
The IMF said the world's second biggest economy would see an end to
price deflation by the end of
the year.
"There are clear indications that Japan's long-standing economic
problems have eased," the IMF said.
The IMF said it expected Japan's consumer price
index rate of inflation to fall 0.1% in 2004, with deflationary
pressures "ebbing to zero" by the end of next year.
"Deflationary pressures have eased, against the backdrop of a narrowing output gap and
supportive monetary policy," the IMF said.
"Recovery has strengthened and become more broadly based, while labour
market conditions have improved," it added.
However, the IMF warned its upbeat outlook for Japan could be
threatened by a sharp rise in global interest rates or a slowdown in the
economic performance of its main trading partners.
The IMF also noted ongoing weaknesses in the country's financial and
corporate sectors, and said the high level of public debt could hold back
growth in the medium term.
But it praised the Bank of Japan for pursuing a policy of maintaining
zero interest rates until the country's deflationary pressures ease.
(Agencies) | 
Updated: 2004-08-12 10:11