The International Monetary Fund (IMF) on Tuesday reduced its growth forecast for Japan in 2024, placing it at 0.3%, which represents a decrease of 0.4 percentage points compared to its estimate three months ago. The revision reflects a number of negative factors affecting the Japanese economy, including temporary disruptions to auto supplies and the decline of one-off factors that boosted growth in 2023, such as the tourism boom.
This new IMF forecast, published in its report World Economic Outlookis the lowest for Japan since 2020, the year in which the country’s economy suffered a significant contraction due to the COVID-19 pandemic. In addition to supply chain disruptions caused by a safety scandal that hit a subsidiary of Toyota Motor Corp., the IMF said Japan’s growth has been hampered by the weakening of some economic drivers that were decisive last year. past.
Japan, currently undergoing a general election campaign in which the economy is one of the central issues, faces a major challenge in its effort to revitalize its economic growth. The drop in the 2024 growth forecast puts Japan in a more vulnerable situation compared to other advanced economies, which did not experience such sharp cuts to IMF projections.
Despite the downward revision, the IMF projects a moderate recovery in 2025, with growth of 1.1%, 0.1% higher than estimated in July. This increase is attributed to expectations that wage increases and consumption will boost economic activity in the medium term.
The IMF’s global report showed no major changes in its overall growth outlook for the world, maintaining the forecast for economic expansion of 3.2% for both this year and 2025, with a slight downward revision of 0.1 percentage points in the forecast for 2025. However, the global economic scenario remains uncertain, especially amid the fight against inflation and geopolitical tensions.
Pierre-Olivier Gourinchas, the IMF’s chief economist, said during a press conference that the “battle against inflation is almost won” but warned that risks are now “tilted to the downside.” Among these risks, he mentioned growing protectionism in several countries, which have adopted trade policies focused on protecting their workers and local industries. Although these policies can generate short-term benefits, Gourinchas warned that they often lead to trade retaliation and a reduction in living standards.
Globally, the report highlights that emerging economies in Asia are experiencing robust growth thanks to strong demand for semiconductors and electronic products, despite conflicts and tensions in regions such as the Middle East and sub-Saharan Africa. However, the IMF also warned of signs of geoeconomic fragmentation, with trade increasing within geopolitical blocs rather than between them, which could affect the long-term trade outlook.
Turning to other major economies, the IMF revised upward its growth forecast for the United States, raising it to 2.8% in 2024, supported by solid consumer spending and higher capital investments. However, growth is expected to slow to 2.2% in 2025. This figure, however, is 0.3 points higher than the forecast made in July, suggesting a more optimistic outlook for the US economy in the future. medium term.
On the other hand, the growth projection for China in 2024 remained at 4.5%, although the forecast for this year was revised downwards, remaining at 4.8% due to the continued weakness in consumer confidence and the problems in the real estate sector, which has been one of the main drags on the Chinese economy in recent months.
As for Europe, the IMF revised its growth expectations for the euro zone in 2024 slightly downward, leaving them at 0.8%. The slowdown in the manufacturing sector in Germany, the region’s largest economy, was one of the main factors behind this decline. By 2025, growth in the eurozone is expected to reach 1.2%, although this figure was also revised downwards by 0.3 percentage points.
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