Japan likely to endure 'modest' economic slowdown: IMF
Thursday, 31 July 2008
WASHINGTON, July 30 (AFP): Japan's economy looks set to endure a "modest" slowdown as economic problems hamper the United States and as global stock markets continue to be plagued by turmoil, an IMF report warned yesterday.
In an annual review of the world's second-largest economy, the International Monetary Fund (IMF) said Japan has shown resilience to the US slowdown and global market jitters, partly because of the low exposure of Japanese banks to the ailing US mortgage market, but said it was being buffeted by trade shortfalls and "weakening" consumer confidence.
"We see the economy in Japan clearly slowing down," said Daniel Citrin, the IMF's deputy director and mission chief for Japan.
IMF economists expect Japan to experience a so-called economic "soft landing," but they said that further global economic turbulence could affect this outlook.
The Washington-based multilateral institution forecasts that Japan's economic growth will cool to 1.5 per cent this year, compared with annualised gross domestic product (GDP) growth of 2.1 per cent in 2007 and 2.4 per cent in 2006.
Citrin, talking to reporters on a conference call, said Japan's economy struggled for momentum during the second quarter of this year, but predicted that growth would pick up modestly during the second half of 2008.
Economists have been keeping a nervous watch on Japan's economy to see if it has been impacted by slowing US growth, which has been weighed down by a sharp housing market slump, a credit squeeze and soaring world oil prices.
America is a vital export market for Japanese goods and many large Japanese firms, such as Toyota and Sony, have a big presence in the world's largest economy.
The IMF said that demand from countries other than the United States, particularly in Asia, had helped prop up Japanese exports this year.
The international financial watchdog also said the spike in oil and other.
Japan is vulnerable to oil price shocks because it imports all the oil consumed by its voracious economy.
Asked how rocketing fuel costs have impacted Japan, Citrin replied:"It's had a big impact."
Oil prices streaked to record highs over 147 dollars a barrel earlier this month, but have since moderated to around 122 dollars on international markets.
Private economists have voiced increased concern recently about mounting inflationary pressures in Japan which are unsettling consumers.
Japan's core inflation rate hit 1.9 per cent in June, the fastest pace since January 1998 when consumer prices rose 2.0 per cent, according to a government report Friday. It was the ninth straight monthly increase in prices.
The IMF meanwhile praised the Bank of Japan (BoJ) for its liquidity operations, saying its proactive stance had helped underpin the country's financial markets during global market turmoil.
The BoJ has kept interest rates pegged at 0.50 per cent since February. BoJ chief Masaaki Shirakawa said earlier this month that the Japanese economy was slowing, but predicted it would avert a recession.
In an annual review of the world's second-largest economy, the International Monetary Fund (IMF) said Japan has shown resilience to the US slowdown and global market jitters, partly because of the low exposure of Japanese banks to the ailing US mortgage market, but said it was being buffeted by trade shortfalls and "weakening" consumer confidence.
"We see the economy in Japan clearly slowing down," said Daniel Citrin, the IMF's deputy director and mission chief for Japan.
IMF economists expect Japan to experience a so-called economic "soft landing," but they said that further global economic turbulence could affect this outlook.
The Washington-based multilateral institution forecasts that Japan's economic growth will cool to 1.5 per cent this year, compared with annualised gross domestic product (GDP) growth of 2.1 per cent in 2007 and 2.4 per cent in 2006.
Citrin, talking to reporters on a conference call, said Japan's economy struggled for momentum during the second quarter of this year, but predicted that growth would pick up modestly during the second half of 2008.
Economists have been keeping a nervous watch on Japan's economy to see if it has been impacted by slowing US growth, which has been weighed down by a sharp housing market slump, a credit squeeze and soaring world oil prices.
America is a vital export market for Japanese goods and many large Japanese firms, such as Toyota and Sony, have a big presence in the world's largest economy.
The IMF said that demand from countries other than the United States, particularly in Asia, had helped prop up Japanese exports this year.
The international financial watchdog also said the spike in oil and other.
Japan is vulnerable to oil price shocks because it imports all the oil consumed by its voracious economy.
Asked how rocketing fuel costs have impacted Japan, Citrin replied:"It's had a big impact."
Oil prices streaked to record highs over 147 dollars a barrel earlier this month, but have since moderated to around 122 dollars on international markets.
Private economists have voiced increased concern recently about mounting inflationary pressures in Japan which are unsettling consumers.
Japan's core inflation rate hit 1.9 per cent in June, the fastest pace since January 1998 when consumer prices rose 2.0 per cent, according to a government report Friday. It was the ninth straight monthly increase in prices.
The IMF meanwhile praised the Bank of Japan (BoJ) for its liquidity operations, saying its proactive stance had helped underpin the country's financial markets during global market turmoil.
The BoJ has kept interest rates pegged at 0.50 per cent since February. BoJ chief Masaaki Shirakawa said earlier this month that the Japanese economy was slowing, but predicted it would avert a recession.