MNI BRIEF: IMF Cuts Japan's 2023 Growth to 1.6% from 1.7%

The International Monetary Fund on Tuesday trimmed its 2023 growth forecast for Japan's economy to 1.6% from its July estimate of 1.7%, while its 2022 forecast was left unchanged at 1.7%.

“Growth in Japan is expected to be more stable at 1.7 percent in both 2021 and 2022 and 1.6 percent 2023, with a downward revision for 2023 since July of 0.1 percentage point,” the IMF’s World Economic Outlook said.

“The revisions reflect mainly external factors, with a negative shift in the terms of trade (ratio of export to import prices) from higher energy import prices as well as lower consumption as price inflation outpaces wage growth,” it said.

As for monetary policy, the IMF said Japan’s policy rates could continue to "remain low" given the low underlying core inflation and weak wage growth.

The IMF noted that Japanese authorities intervened to support the yen in September amid the currency’s rapid depreciation and a widening monetary policy divergence with the US.

The IMF lowered its global economic growth forecast for 2023 to 2.7% from July’s estimate of 2.9%, although it left this year's forecast unchanged at 3.2%.

“Risks to the outlook continue to be on the downside," the IMF warned.

"Overall, risks are elevated as the world grapple with the impact of Russia’s invasion of Ukraine, a slowdown in economic activity as central banks ramp up efforts to quell inflation, and the lingering pandemic.”