MNI POLICY: BOJ Looks To IMF Forecast For Global Growth Clues

--With BOJ Outlook Due In July, IMF Global Outlook To Feed In

By Hiroshi Inoue

     TOKYO (MNI) - The Bank of Japan's next Quarterly Outlook report is due in

July and, as is normal, the bank's economists will lean heavily on the

International Monetary Fund's updated forecasts, expected to be released next

week.

     The IMF has indicated it will look to downgrade its global growth outlook

for 2020 from the 3.0% decline forecast in April as the coronavirus pandemic

spreads though main emerging market economies including Brazil and India.

     Despite the expected downgrade, BOJ officials see the IMF sticking with its

view that the economy will recover moderately in the second half of the year,

although the bounceback may start later than initially seen.

     --IMPACT ON TRADE PARTNERS

     Weaker emerging economies will weigh on overall global growth and BOJ's

main concern is how the fall out hits the major markets in the U.S., Europe and

the ASEAN nations and how that will impact on the bank's expectations for

Japan's second half recovery, all of course dependent on containment at least of

the pandemic.

     Economies are gradually opening across the U.S. and Europe and pent-up

demand is expected to support Japanese exports, albeit slowLy, with little sign

yet of a sharp 'V-shaped' recovery as global travel and tourism remains largely

shuttered.

     BOJ economists have already factored in weak domestic demand and output

through May, but are still convinced the economy bottomed in Q2 and will recover

from here. They expect the June Tankan survey to show sharply lower current

business sentiment, but of greater interest will be how corporate leaders see

conditions three months ahead.

--MNI Tokyo Bureau; tel: +81 90-2175-0040; email: hiroshi.inoue@marketnews.com

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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