WASHINGTON: The International Monetary Fund on Tuesday kept its 2024 economic growth forecast for Japan unchanged at 0.9%, a significant slowdown from 1.9% growth in 2023 fueled by greater inbound tourism demand.

The IMF projected inflation in the country to reach 2.2% in 2024 and 2.1% in 2025, topping the Bank of Japan’s target of 2%.

In Japan, “policy rates are projected to rise gradually, reflecting growing confidence that inflation will sustainably converge to target over the medium term,” it said, forecasting rates to climb to around 0.5% in roughly three years.

The BOJ last month ended its negative interest rate policy and raised short-term rates to zero to 0.1%, its first rate increase in 17 years.

The IMF raised its global growth projection for 2024 to 3.2%, up 0.1 percentage point from its previous January forecast, citing stronger-than-expected U.S. growth.

For 2025, the IMF kept its global growth estimate unchanged at 3.2%.

The IMF predicted that the U.S. Federal Reserve and the European Central Bank will start lowering policy rates in the second half of this year.

JIJI Press