IMF sees temporary boost to Japan's economy, revises higher growth forecast for 2016-17

2016 Annual Meetings’ of the International Monetary Fund (IMF), and the Institute of International Finance (IIF), were held in Washington DC recently. The annual meetings are major global financial and economic sector conferences and are regularly attended by key figures from the world of finance, politics and economics, including finance ministers and central bankers from various countries.

During the three days of annual meetings, discussions of key issues included the outlook for the global economy, developments in financial markets and monetary system, promoting economic development and poverty reduction in developing countries, economic outlook and sustainable growth as well as managing de-risking.

At the meeting the IMF has revised up Japan's growth forecast for next year due to the postponement of fiscal consolidation. IMF now expects Japanese economy is now expected to grow by 0.6 percent in both 2016-17. For 2017, this is a significant upgrade of the growth outlook as the organization had expected growth to fall by 0.1 percent in the April WEO outlook.

The Bank of Japan (BoJ) monetary policy rate may be moved to positive levels in 2017 but the 2 percent inflation target will be difficult to reach anytime soon, the IMF said. On the fiscal side, the structural deficit remains high at 5 percent of GDP. The IMF noted that many Japanese banks have moved operations abroad, which has held up earnings.