WASHINGTON: The International Monetary Fund on Monday forecast that Japan’s economy will grow by 0.7 percent in 2020, up 0.2 percentage point from its earlier estimate due to stimulus measures to mitigate the impact of a recent consumption tax hike.
Global growth was projected to be 3.3 percent this year, 0.1 point lower than the previous estimate, reflecting a more subdued growth forecast for India, the Washington-based institution said in its update of the World Economic Outlook report released in October, report agencies.The signing of a partial trade deal between the United States and China last week, which has brought a temporary truce in their trade war, led the IMF to lift the projection of China’s growth this year by 0.2 point to 6.0 percent.
The so-called phase one agreement includes a U.S. plan to alleviate some of its punitive tariffs imposed on Chinese goods in exchange for Beijing’s commitment to make additional purchases of U.S. products and strengthen intellectual property protections.
In the United States, growth is projected at 2.0 percent in 2020, 0.1 percentage point lower than the earlier estimate, while the eurozone economy is projected to grow 1.3 percent in 2020, also a downward revision of 0.1 point.
As for Japan, the IMF said it revised upward the country’s growth rate for 2020 due to the “anticipated boost” from government stimulus measures passed last month following the 2-percentage-point consumption tax increase from 8 percent in October.
The government approved a package of stimulus measures worth 26 trillion yen ($236 billion) as it seeks to shield the Japanese economy from weak overseas demand, the fallout from the consumption tax hike and the risk of a slowdown after next summer’s Tokyo Olympics.
Japan’s growth is likely to moderate to 0.5 percent in 2021, unchanged from the October estimate, as the impact of fiscal stimulus fades, the IMF said.The world economy is estimated to expand 3.4 percent in 2021, down 0.2 point, with the IMF pointing to the remaining “prominent” downside risks such as the rising geopolitical tensions between the United States and Iran that could disrupt global oil supply and hurt sentiment.
Growth in trade of goods and services across the world was revised downward by 0.3 point from the October forecast to 2.9 percent in 2020 and downgraded 0.1 point to 3.7 percent in 2021, according to the IMF.
The U.S. and eurozone economies are likely to expand 1.7 percent and 1.4 percent, respectively, in 2021, flat from the October projections. The Chinese economy is expected to slow to 5.8 percent growth in 2021, revised downward by 0.1 point.