{
  "title": "IMF Executive Board Concludes 2022 Article IV Consultation with Japan",
  "publication": "IMF News, April 6, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/04/06/pr22106-imf-executive-board-concludes-2022-article-iv-consultation-with-japan",
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  "summary": "IMF Executive Board Concludes 2022 Article IV Consultation with Japan",
  "publishDate": "2022-04-06",
  "sections": [
    {
      "heading": "Economic outlook and recent developments",
      "content": "- Real GDP contracted by 4.5 percent in 2020 and is estimated to have grown by 1.6 percent in 2021.\n- GDP growth is projected at 2.4 percent in 2022 and 2.3 percent in 2023 (Table 1 projections).\n- Domestic demand components (selected):\n  - Private consumption: 2020: -5.2; 2021: 1.3; 2022: 2.2; 2023: 2.7 (percent change).\n  - Gross Private Fixed Investment: 2020: -6.7; 2021: -0.9; 2022: 1.5; 2023: 4.2 (percent change).\n  - Business investment: 2020: -6.5; 2021: -0.7; 2022: 4.6 (percent change).\n  - Residential investment: 2019: 4.1; 2020: -7.9; 2021: -1.9; 2022: -0.1 (percent change).\n- External sector and prices:\n  - Current account surplus: 2.9 percent of GDP in 2021.\n  - Exports of goods and services: 2020: -11.8; 2021: 11.6; 2022: 5.7; 2023: 5.6 (percent change).\n  - Imports of goods and services: 2019: 5.2; 2020: 3.2; 2021: 4.7 (percent change).\n  - Headline CPI inflation projected at 1.0 percent in 2022; inflation rose gradually during 2021 but remains well below the 2 percent target.\n- Labor market and financial conditions:\n  - Business bankruptcies and non-performing loans are at historical lows.\n  - Banking system described as well-capitalized and liquid; near-term vulnerabilities contained.\n- Risks and headwinds:\n  - Higher commodity prices and elevated uncertainty related to the Ukraine conflict are expected to slow domestic-demand recovery.\n  - External demand may be affected by geopolitical tensions, mainly due to an expected slowdown in Europe.\n- Long-run constraints:\n  - Ageing and declining population will continue to weigh in the medium to long term.\n  - Significant scarring effects are considered unlikely due to strong policy support keeping unemployment low."
    },
    {
      "heading": "Fiscal, monetary, and structural policy guidance",
      "content": "- Fiscal policy:\n  - Near-term fiscal policy should remain flexible and supportive until the recovery is entrenched, while increasingly shifting toward more targeted measures.\n  - Need for a well-specified medium-term fiscal consolidation strategy that preserves growth to put public debt on a downward path and strengthen shock resilience.\n  - Public debt, gross: 2018: 231.4; 2019: 232.5; 2020: 236.1; 2021: 259.0; 2022: 263.1; 2023: 262.5; (end-period percent of GDP as presented in Table 1).\n  - Overall balance (percent of GDP): 2018: -3.1; 2019: -2.5; 2020: -3.0; 2021: -9.0; 2022: -7.6; 2023: -7.8; 2024 proj.: -3.5 (as shown in Table 1).\n- Monetary policy:\n  - Directors agreed that accommodative monetary policy remains appropriate.\n  - Several Directors recommended further refinements to the monetary policy framework to help safeguard financial stability; some Directors noted the authorities view the current framework as effective and flexible.\n  - Given the effective lower bound constraint, most Directors considered that comprehensive and mutually reinforcing fiscal, monetary, and structural policies are essential to lift inflation durably to target.\n  - Suggestions to enhance clear communication to improve monetary policy effectiveness.\n- Financial sector and macroprudential policy:\n  - Financial supervision should remain vigilant; pandemic-related financial support should be scaled down as the pandemic recedes.\n  - Directors urged further strengthening of financial supervision and regulation, broadening the scope of systemic risk assessment, and enhancing the macroprudential policy toolkit.\n- Structural reforms and transformation:\n  - Reinvigorate reforms to increase labor supply, boost productivity, and support investment to lift potential growth and facilitate reflation.\n  - Accelerate reforms to increase labor supply, productivity, and wages, particularly of female and older workers, in light of an aging and shrinking population.\n  - Broaden and deepen corporate governance and regulatory reforms to improve business dynamism and spur investment.\n  - Leverage planned digital and green transformation to promote strong, sustainable, and inclusive growth.\n  - Directors welcomed Japan’s carbon neutrality commitment and noted the important role carbon pricing could play; further efforts needed to deliver on related targets.\n  - Digitalization: recent initiatives and a centralized Digital Agency expected to accelerate digitalization; recommendation to avoid job displacement of unskilled workers to ensure an inclusive transition.\n- External policy:\n  - Directors welcomed Japan’s continued multilateral and regional efforts to promote open, stable, and transparent trade policies."
    },
    {
      "heading": "Executive Board Assessment and recommendations",
      "content": "- Directors commended strong policy support and steady vaccine rollout aiding recovery.\n- Uncertainty from the pandemic and the war in Ukraine pose significant downside risks.\n- Emphasis on policies to increase productivity and achieve inclusive and sustainable growth.\n- Recommended policy mix:\n  - Maintain flexible, supportive near-term fiscal policy while transitioning to targeted measures.\n  - Implement a clear medium-term fiscal consolidation strategy that preserves growth.\n  - Keep accommodative monetary policy but consider refinements and clear communication.\n  - Strengthen financial supervision, widen systemic risk assessment, and enhance macroprudential tools.\n  - Scale down pandemic-related financial support as conditions normalize.\n  - Accelerate structural reforms to increase labor supply, productivity, and wages; broaden corporate governance and regulatory reforms.\n  - Leverage digital and green transitions; consider carbon pricing as part of achieving carbon neutrality."
    },
    {
      "heading": "Key statistics (selected from Table 1)",
      "content": "- Nominal GDP: US$ 4,937 Billion (2021).\n- GDP per capita: US$ 39,340 (2021).\n- Population: 126 Million (2021).\n- Quota: SDR 30.8 billion (2021).\n- Current account balance (in billions of US$): 2018: 203.5; 2019: 177.8; 2020: 176.0; 2021: 148.8; 2022: 141.7; 2023: 117.2; 2024 proj.: 142.2.\n- Exports of goods, f.o.b. (in billions of US$): 2018: 689.1; 2019: 735.9; 2020: 695.0; 2021: 631.5; 2022: 748.5; 2023: 806.8; 2024 proj.: 856.2.\n- Imports of goods, f.o.b. (in billions of US$): 2018: 645.0; 2019: 724.9; 2020: 693.6; 2021: 602.8; 2022: 732.1; 2023: 836.6; 2024 proj.: 878.1.\n- Energy imports (in billions of US$): 2018: 117.8; 2019: 148.5; 2020: 131.9; 2021: 89.1; 2022: 127.7; 2023: 195.9; 2024 proj.: 168.5.\n- Total reserves minus gold (in billions of US$): 2018: 1232.4; 2019: 1239.4; 2020: 1286.3; 2021: 1348.2.\n- Real effective exchange rate (ULC-based, 2010=100): 2017: 76.5; 2018: 74.6; 2019: 75.4; 2020: 74.7.\n- Old-age dependency (percent): 2017: 46.0; 2018: 46.9; 2019: 47.6; 2020: 48.3; 2021: 48.7; 2022: 48.9; 2023: 49.3.\n\nIMF Executive Board press release: IMF Executive Board Concludes 2022 Article IV Consultation with Japan (April 6, 2022).\n\n---\n\n\n References\n\n- https://www.imf.org/-/media/images/imf/bios/imfboard.jpg\n- The Executive Board\n- Japan and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- http://www.IMF.org/external/np/sec/misc/qualifiers.htm\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/04/06/pr22106-imf-executive-board-concludes-2022-article-iv-consultation-with-japan"
    }
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    "Published: April 6, 2022",
    "Real GDP contracted by 4.5 percent in 2020 and is estimated to have grown by 1.6 percent in 2021.",
    "GDP growth is projected at 2.4 percent in 2022 and 2.3 percent in 2023 (Table 1 projections).",
    "Domestic demand components (selected):",
    "External sector and prices:",
    "Labor market and financial conditions:",
    "Risks and headwinds:",
    "Long-run constraints:",
    "Fiscal policy:",
    "Monetary policy:",
    "Financial sector and macroprudential policy:",
    "Structural reforms and transformation:",
    "External policy:",
    "Directors commended strong policy support and steady vaccine rollout aiding recovery.",
    "Uncertainty from the pandemic and the war in Ukraine pose significant downside risks.",
    "Emphasis on policies to increase productivity and achieve inclusive and sustainable growth.",
    "Recommended policy mix:",
    "Nominal GDP: US$ 4,937 Billion (2021).",
    "GDP per capita: US$ 39,340 (2021).",
    "Population: 126 Million (2021).",
    "Quota: SDR 30.8 billion (2021).",
    "Current account balance (in billions of US$): 2018: 203.5; 2019: 177.8; 2020: 176.0; 2021: 148.8; 2022: 141.7; 2023: 117.2; 2024 proj.: 142.2.",
    "Exports of goods, f.o.b. (in billions of US$): 2018: 689.1; 2019: 735.9; 2020: 695.0; 2021: 631.5; 2022: 748.5; 2023: 806.8; 2024 proj.: 856.2.",
    "Imports of goods, f.o.b. (in billions of US$): 2018: 645.0; 2019: 724.9; 2020: 693.6; 2021: 602.8; 2022: 732.1; 2023: 836.6; 2024 proj.: 878.1.",
    "Energy imports (in billions of US$): 2018: 117.8; 2019: 148.5; 2020: 131.9; 2021: 89.1; 2022: 127.7; 2023: 195.9; 2024 proj.: 168.5.",
    "Total reserves minus gold (in billions of US$): 2018: 1232.4; 2019: 1239.4; 2020: 1286.3; 2021: 1348.2.",
    "Real effective exchange rate (ULC-based, 2010=100): 2017: 76.5; 2018: 74.6; 2019: 75.4; 2020: 74.7.",
    "Old-age dependency (percent): 2017: 46.0; 2018: 46.9; 2019: 47.6; 2020: 48.3; 2021: 48.7; 2022: 48.9; 2023: 49.3.",
    "[https://www.imf.org/-/media/images/imf/bios/imfboard.jpg](https://www.imf.org/-/media/images/imf/bios/imfboard.jpg)",
    "[The Executive Board](https://www.imf.org/external/np/sec/memdir/eds.aspx)",
    "[Japan and the IMF](http://www.imf.org/external/country/JPN/index.htm)",
    "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[http://www.IMF.org/external/np/sec/misc/qualifiers.htm](http://www.imf.org/external/np/sec/misc/qualifiers.htm)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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