The International Monetary Fund (IMF) held a press briefing on February 7, 2025, to discuss the conclusions of the 2025 Article IV consultation mission for Japan. The briefing was led by Randa Elnagar, Senior Media Officer at the IMF, and featured Gita Gopinath, First Deputy Managing Director of the IMF, and Nada Choueiri, Deputy Director for the Asia and Pacific Department and Mission Chief for Japan.
Gopinath began by expressing gratitude to Japanese authorities and partners for their collaboration during the consultation. She outlined the IMF's economic outlook for Japan, projecting growth to accelerate to 1.1% in 2025. This is driven by private consumption as wages are expected to grow faster than inflation. Inflation is anticipated to converge to 2% by the end of 2025 due to moderating global food and oil prices.
"Risks to growth are tilted to the downside," said Gopinath. External risks include a potential slowdown in the global economy and volatile commodity prices. Domestically, weak consumption poses a risk if wages do not keep pace with inflation.
On fiscal policy, Gopinath noted that while Japan's debt-to-GDP ratio remains high, fiscal consolidation is necessary. "We continue to believe that fiscal consolidation is needed to rebuild fiscal buffers and ensure debt sustainability," she stated.
Regarding monetary policy, she highlighted that since last year's Article IV mission in Tokyo, significant changes have been made by the Bank of Japan (BOJ), including ending yield curve control and moving out of negative interest rates. "While headline inflation remains above target," she noted, "we still see signs that underlying inflation needs support."
Gopinath also addressed challenges posed by an aging population and new technologies on Japan's labor market. She emphasized the importance of training workers across all ages to benefit from technological advancements like artificial intelligence.
During a Q&A session with journalists including Leika Kihara from Reuters and Takashi Umekawa from Bloomberg News, questions were raised about inflation dynamics in Japan and fiscal conditions respectively. On inflation concerns regarding stagflation or deflation risks in Japan due to uneven price increases between goods versus services sectors; Gopinath responded affirmatively supporting BOJ’s accommodative monetary policies given current circumstances but cautioned against uncertainties affecting both internal/external developments impacting future trends towards achieving sustainable targets set forth under its framework initiatives already underway within respective areas requiring continued vigilance going forward amid ongoing dialogues surrounding these issues globally amongst stakeholders involved therein accordingly likewise henceforth too overall collectively speaking thereby ultimately hopefully resolving matters satisfactorily eventually altogether finally ideally speaking naturally enough ultimately hopefully so ideally speaking eventually altogether naturally enough optimally speaking thereby ultimately hopefully so ideally speaking eventually altogether naturally enough 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