Friday, 24 September, 2021

IMF cuts Japan’s growth forecast to 2.8pc in 2021

WASHINGTON: The International Monetary Fund on Tuesday forecast that Japan’s economy will grow 2.8 per cent in 2021 from a year before, down 0.5 percentage point from its April estimate as the country continues to struggle to contain the spread of COVID-19.

The global growth projection remained unchanged at 6.0 per cent, as dimmed prospects for Japan and emerging economies such as China and India were offset by improved outlooks for the United States and some other major advanced economies, report agencies.

In an update of the World Economic Outlook report, the Washington-based institution highlighted the continuing divergence of economic recoveries from the pandemic due to differences in the pace of COVID-19 vaccine rollouts and policy support.

“Vaccine access has emerged as the principal fault line along which the global recovery splits into two blocs,” the IMF said, drawing a distinction between countries that can expect further normalization of activity later this year — almost all advanced economies — and those that will face resurgent infections and rising deaths from the pandemic.

“The recovery, however, is not assured even in countries where infections are currently very low so long as the virus circulates elsewhere,” it added, warning of the highly contagious delta variant that is pushing up the number of cases in many parts of the world.

Japan was the only country among the Group of Seven industrialized nations that faced a downgrade in the IMF’s latest economic outlook. The country’s vaccine rollout initially lagged those of other developed countries, and it has imposed anti-virus business restrictions amid a rise in infection cases.

But the world’s third-largest economy is anticipated to see a stronger rebound in the second half of 2021, supported by further inoculation efforts. The IMF raised its growth outlook for 2022 by 0.5 point to 3.0 per cent.

IMF chief economist Gita Gopinath said no major economic impact was expected from holding the Tokyo Olympics without allowing spectators from the general public at venues in and around the Japanese capital amid the pandemic, given that most of the infrastructure spending — a key factor to lift the economy — for the Games was done in the past.

But she noted at a news conference that Japan was facing “further downside risk” coming from the most recent COVID-19 state of emergency declared for Tokyo from July 12, which was not reflected in the latest report.