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IMF cuts Japan's 2022 growth outlook; warns of risks from Russia's war in Ukraine

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Duh, you think?

Hardly a surprising prediction, I could have pretty much made it my self. Nor sure it even classifies as news

Similar impacts with minor local variations will occur world wide.

Much of the energy impact could have been ameliorated if Japan had grasped the nettle earlier and done way more in cutting its carbon footprint and reduced its reliance on imported fossil fuels.

4 ( +5 / -1 )

Right.. so the current economic climate is nothing to do with the gross over-reaction to COVID for the last 2+ years...

-3 ( +3 / -6 )

The International Monetary Fund has slashed Japan's economic growth forecast for 2022 to 2.4 percent from its earlier estimate of 3.3 percent, citing elevated uncertainty stemming from Russia's war in Ukraine

The IMF is an international loan shark that institutes austerity measures in order to capture nations' key resources.

-2 ( +2 / -4 )

AgentX, the effects of the COVID measures were already baked in to the system, what we are seeing now is the effect of the russian attack on Ukraine which is on top of any ongoing COVID related effects.

2 ( +4 / -2 )

Ukraine must repay $7.8 billion in loans this year, it borrowed $ 1.2 billion in March from the IMF and world Bank right after it made a $ 1 billion loan payment in March.

This is not connected to the war these payments are part of $58 billion Ukraine owes to western countries and Banks.

On top of everything Ukraine is getting weapons on "credit" which is not part of the $1.2 billion March loan or part of the$ 1 billion payments per month it has to make this year.

Ukraine askes for aid ad gets a few hundred millions in donations.

If the west really wants to help Ukraine then forgive the next several billion dollars payments letting Ukraine keep that money to help their people and give them the weapons free of charge.

This would improve Ukraine's situation far faster than a few million dollars trickling in from donations.

2 ( +4 / -2 )

Gonna repeat it over and over again , sell your YEN until you still can.

-6 ( +2 / -8 )

IMF is a loan shark - disgusting

-3 ( +0 / -3 )

Larr FlintToday  08:33 pm JST

Gonna repeat it over and over again , sell your YEN until you still can.

Most people with any investment smarts buy a currency when it's cheap, not sell.

6 ( +7 / -1 )

Just to be clear:

This was the conclusion of the annual Article IV discussion that the IMF ordinarily has with its members. It didn't involve the IMF lending or giving money to Japan.

Russia's invasion of Ukraine? Part of it.

Now read the interesting stuff from the discussion's conclusion:

GDP growth is projected at 2.4 percent in 2022 amid continued strong policy support, the high vaccination rate, and easing global supply constraints. Consumption will lead the recovery, with pent-up demand being unwound. As pandemic-related uncertainty and supply constraints subside, investment is seen to bounce back. The pace of recovery for domestic demand will be slowed by higher commodity prices and elevated uncertainty related to the Ukraine conflict. External demand will also be affected by the geopolitical tensions, mainly due to an expected slowdown in Europe. Inflation is expected to pick up, spurred by higher import prices and stronger domestic demand, with headline CPI inflation projected at 1.0 percent in 2022. An ageing and declining population will continue to weigh in the medium to long term. Significant scarring effects are unlikely, as the strong policy support has kept unemployment low. Fiscal buffers should be rebuilt gradually over the medium and long term in a growth-friendly manner to preserve the ability to respond to shocks. Monetary policy accommodation is warranted while taking further measures to make that stance more sustainable. Digital and green transformation could be leveraged to promote strong, sustainable, and inclusive growth after the pandemic. Reinvigorating reforms to increase labor supply, boost productivity, and support investment would lift potential growth and facilitate reflation.

Page down to the EB's take on the findings (https://www.imf.org/en/News/Articles/2022/04/06/pr22106-imf-executive-board-concludes-2022-article-iv-consultation-with-japan) to read the voted one's emphasis over the importance of future efforts of Japan to increase productivity, consolidate a strategy that preserves growth by putting public debt on a downward path to strengthen the ability to respond to shocks, and achieve inclusive and sustainable growth. My favorite:

Noting the challenges associated with prolonged low interest rates and rising demographic pressures, Directors urged the authorities to further strengthen financial supervision and regulation, broaden the scope of the systemic risk assessment, and enhance the macroprudential policy toolkit.

Just can't make this stuff up.

0 ( +0 / -0 )

Larr FlintToday  08:33 pm JST

Gonna repeat it over and over again , sell your YEN until you still can

Been hearing that chicken Little "the sky is falling," since I arrived in Japan over 30 years ago.

But the odd thing is the yen is higher today than back then.

When I arrived the US dollar was ¥130 today ¥123 it was even more dramatic with the Canadian dollar as it's value vis a vis the yen is now a joke.

2 ( +3 / -1 )

You mean Japan's growth is stifled because of the sanctions and tariffs it placed on Russia and the 2 years of pandemic.

Don't blame it all on Ukraine crisis.

-7 ( +0 / -7 )

Want to compare Japan's annual Art IV results with another country?

How about Switzerland?

This was released at nearly the same time (April 6th, to be exact).

Some of it is similar, and some isn't. Note the language to this neutral country.

Switzerland recovered strongly from the pandemic in 2021, reflecting sound, supportive, and agile domestic policies and a pickup of the global economy . However, new challenges have emerged. These include spillovers from the war in Ukraine (growth, refugees, complex exposures, energy prices/supply) and higher inflation. Other challenges are real estate risks, EU relations, climate change, and population aging. Uncertainty is high, and risks are substantial. Policies should continue to be agile in responding to these challenges. Adverse spillovers from the war in Ukraine should be accommodated (automatic stabilizers, support to refugees). Looking forward, offsetting of extraordinary Covid spending should not create headwinds or depart significantly from the debt-brake rule. Longer-term fiscal policy challenges connected with aging, climate, defense, energy security, and tax reforms are expected to be addressed within the debt-brake rule framework. This will require careful planning and lower non-priority spending or higher revenues. There is space for deficits, but the fiscal framework is robust and not easy to modify. Higher inflation may be mitigated by franc appreciation, or if needed, by policy-rate adjustments. Bank credit growth, profitability, and capital have held up well during Covid-19, and NPLs have remained stable at low levels. But financial-sector risks are growing (market disruptions, complex exposures, real estate) and should be closely monitored. Reactivation of the sectoral CCyB (real estate) is welcome; further measures/tools may be needed. The authorities are taking actions to strengthen supervision, resolution planning, financial integrity, FinTech regulation, climate reporting, and sustainable finance. These should continue, along with pension reforms that would strengthen coverage and sustainability. Steps are also being taken to advance climate policies, EU relations, and energy security.

Growth is expected to moderate to around 2¼ percent in 2022—above medium-term potential growth (1.5 percent), but dampened by spillovers from Russia’s invasion of Ukraine. Switzerland’s direct exposures to the war (exports, financial sector, commodity trade) appear relatively limited, although support for refugees could be significant. Indirect channels include higher energy/commodity prices, supply-chain disruptions, and lower regional and global growth. Fiscal and monetary policies remain supportive, and higher household savings during Covid-19 should buoy consumption and growth. The war in Ukraine is likely to affect activity also in 2023—growth of just under 1½ is expected next year. Inflation is expected to average 2½ percent in 2022, before easing to 1.6 percent in 2023. Lower global demand and higher energy/commodity prices are expected to narrow the external current account surplus to 6¼ percent of GDP, with a pickup in 2023 to 7 percent.

https://www.imf.org/en/News/Articles/2022/04/05/switzerland-staff-concluding-statement-of-the-2022-article-iv-mission

-1 ( +0 / -1 )

The problems are mainly all severe structural ones, not temporary and events driven ones. But it’s of course much easier to blame Lehman bros., a little invisible virus or a conflict thousands of miles away and to bring that as an only reason per media microphones and journalists’ fountain pens.

0 ( +1 / -1 )

It time for Ukraine to bring these runaway Oblast in Ukraine and put these be traitors under the control of Kiev

0 ( +0 / -0 )

@ Yrral: Yes, they did. Vote was 94 - 24 - 58. Becoming only the second country ever to be removed from the council.

https://news.un.org/en/story/2022/04/1115782

Aside from Russia's threat before the vote was taken (according to the Associated Press, Russia told several nations that voting in favor of the resolution or abstaining from the vote would be considered an "unfriendly gesture" and alter that country's relationship with Russia), this might be a factor to be addressed in the IMF's semiannual World Economic Outlook report due this month, addressing global inflation and contraction?

We shall see.

0 ( +0 / -0 )

The problems are mainly all severe structural ones, not temporary and events driven ones.

Japan's "structural" reality is that can spend lots of public money and pay all its debts, while running near-zero interest rates with only moderate inflation.

You don't seem to realize that Covid and Ukraine are unprecedented events in the post war world with enormous economic consequences.

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I am surprised that no one here mentions "weak Yen" which will be permanent from now on.

The IMF, World Bank, and credit rating agencies will label Japan into a developing country soon if the weak Yen maintains its permanent position.

-3 ( +0 / -3 )

In the assessment released on Wednesday, meanwhile, the IMF upgraded Japan's growth forecast for 2023 to 2.3 percent from an earlier estimate of 1.8 percent.

Growth forecast is for improvement. In such an off-balance world, that is surprisingly positive.

-1 ( +0 / -1 )

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