MNI BRIEF: IMF Cuts Japan 2023 GDP View to 1.3%

The International Monetary Fund's World Economic Outlook on Tuesday lowered its 2023 forecast for Japan’s gross domestic product to 1.3% from its January 1.8% estimate, but raised the 2024 growth forecast to 1% from January’s 0.9%.

The IMF expects growth in about 90% of advanced economies to decline in 2023, with unemployment predicted to increase 0.5pp above average from 2022-2024. “The baseline forecast is for global output growth, estimated at 3.4% in 2022, to fall to 2.8% in 2023, 0.1pp lower than predicted in the January 2023 WEO Update, before rising to 3% in 2024,” the IMF warned. "Policymakers have a narrow path to walk toward restoring price stability while avoiding a recession and maintaining financial stability.”

Monetary policy tightening – particularly by major advanced economies – has led to sharp borrowing cost increases, raising concerns on debts, the IMF noted. A hard landing has become a much larger risk, the fund added. "Policymakers may face difficult trade-offs to bring sticky inflation down and maintain growth while also preserving financial stability.”