MNI POLICY: IMF Cuts Japan GDP To 1.0% 2019 From 1.1% in Jan

--IMF WEO Keeps Japan 2020 GDP Forecast At 0.5%

--IMF: Sustained monetary accommodation necessary 

     TOKYO (MNI) - The International Monetary Fund has lowered its forecast for

Japanese economic growth in 2019 to 1.0% from 1.1% in January, but kept its 2020

GDP forecast at 0.5%, the latest IMF's World Economic Outlook showed Tuesday

morning in Washington.

     But the projected 1.0% growth in 2019 was higher than +0.9% made in

October.

     The WEO said, "Japan's economy is set to grow by 1.0% in 2019 (0.1

percentage point higher than in the October WEO). This revision mainly reflects

additional fiscal support this year, including measures to mitigate the effects

of the planned consumption tax rate increase (to 10% from 8%) in October 2019."

     It also said, "Growth is projected to moderate to 0.5% in 2020 (0.2

percentage point higher than in the October 2018 WEO, reflecting the effects of

the aforementioned mitigating measures)."

     Here are the key points from the portion of the IMF's April WEO related to

Japan:

     --The IMF said, "Monetary policy should stay accommodative in these

(advanced) economies until inflation starts showing clear signs of rising toward

central banks' targets. With monetary policy trained on countercyclical demand

management, fiscal policy should emphasize measures that boost potential output

and raise inclusiveness, while maintaining public finances on a sustainable

path."

     --"In Japan, sustained monetary accommodation will be necessary to lift

inflation expectations and progress toward the central bank's target. Fiscal

policy should be geared toward ensuring long-term fiscal sustainability while

protecting growth. The coupling of the planned October increase in the

consumption tax rate with fiscal measures to support near-term activity is

welcome."

     --"Inflation is projected to remain broadly at current levels for the

advanced economy group." "Japan's core inflation rate (excluding fresh food and

energy) is projected to rise to 1.4% by the end of 2020 as the consumption tax

rate is raised in October this year, softening back to about 1.3% in the medium

term."

     --"A sustainable debt trajectory calls for further gradual and steady

increases in the consumption tax rate and reforms of the social security

framework. The success of the broad Abenomics agenda of reflating the economy

depends crucially on also lifting productivity growth and wage inflation, for

which reducing labor market duality to increase productivity of nonregular

workers remains vital."

     --"Durably counteracting the aging-induced decline in labor force growth

will require, among other initiatives, further raising female labor force supply

and encouraging more use of foreign labor."

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

--MNI Washington Bureau; tel: +1 202-371-2121; email: kevin.kastner@marketnews.com

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