## Press Conference on the Concluding Statement of the 2023 Article IV Mission to Japan

_IMF News, January 26, 2023_

## Source details

**Canonical URL:** [Press Conference on the Concluding Statement of the 2023 Article IV Mission to Japan](https://www.imf.org/en/news/articles/2023/01/27/tr012623-japan-press-conference-concluding-statement-2023-article-iv-mission)

## Other formats

- [Markdown version](/en/news/articles/2023/01/27/tr012623-japan-press-conference-concluding-statement-2023-article-iv-mission/index.md)
- [Structured JSON version](/en/news/articles/2023/01/27/tr012623-japan-press-conference-concluding-statement-2023-article-iv-mission/index.json)
- [Bundle manifest](/en/news/articles/2023/01/27/tr012623-japan-press-conference-concluding-statement-2023-article-iv-mission/bundle-manifest.json)

## Bibliographic details
- Published: January 26, 2023

---

### Outlook and growth projections
- Japan is expected to grow at 1.8 percent in 2023, a slight upgrade from 1.6 percent in the October World Economic Outlook.
- Core inflation has accelerated, recording levels not seen in four decades at 4 percent.
- The output gap is projected to close in 2023.
- Consumption of services will be supported by savings accumulated during the pandemic.
- Exports will rise as order backlogs have risen, supply side constraints eased, and high corporate profits from a depreciated yen and delays in implementing previous projects will support business investment.
- Global growth is expected to bottom out in 2023 and improve into 2024; China’s reopening and stronger-than-expected growth in the US and Europe contributed to an upgrade for Japan.

### Inflation outlook and monetary policy
- Primary inflation objective reiterated: reach and durably meet a 2 percent inflation target.
- Current assessment: inflation peaked recently (4 percent) but is not yet judged durably at the 2 percent target without substantial acceleration in wage growth.
- Projection: inflation expected to peak in Q1 2023 and then decline, and by the end of 2024 to be slightly below the inflation target.
- Policy stance recommendations:
  - An overall accommodative monetary policy stance remains appropriate.
  - Shorter-term policy rates should remain unchanged.
  - More flexibility in long-term yields would help better manage risks given increased uncertainty about inflation and could lead to a smoother transition to a neutral monetary policy stance once there is stronger evidence that the inflation target will be durably met.
  - Changes in monetary policy settings should be well communicated.

### Fiscal outlook and recommendations
- The primary fiscal deficit will stay elevated in 2023 following the adoption of the October 2022 fiscal package.
- Fiscal policy guidance:
  - Amid the recovery, rising inflation, tighter labor markets and a closing output gap, fiscal support should be withdrawn more quickly and new measures limited and targeted only to vulnerable households.
  - Any additional spending measures should be targeted and come hand in hand with revenue-raising measures.
  - Over the medium-term, growth-friendly and credible fiscal consolidation is necessary to put public debt on a downward path and to rebuild fiscal buffers.
  - Financial support measures should be limited to viable firms.
- Specific fiscal context and figures:
  - Japan has a very high level of public debt, "250% of GDP roughly" (as stated by the Mission Chief).
- On defense and other spending increases:
  - Any increase in expenditures should be met with an increase in revenues.

### Structural and medium-term policy priorities
- Labor market and fiscal reforms are warranted to:
  - Raise potential growth.
  - Reduce gender inequalities.
  - Offset the drag from fiscal consolidation.
- Promote green and digital investment to:
  - Help achieve climate targets.
  - Reap the benefits of the digital economy.
- Investment priorities noted: important investment needed for the green transformation and digital transformation.

### Risks and uncertainties
- Inflation outlook carries significant uncertainty with both upside and downside risks.
- Japan faces unique two-sided risks to inflation; stronger wage growth is critical to sustain a 2 percent inflation rate.
- Global slowdown risks: slower global demand reduces external demand for export-reliant countries; however, easing energy prices and milder-than-feared winter in Europe have mitigated some risks.

*Press Conference, January 26, 2023 — IMF Communications Department; Participants: Gita Gopinath, First Deputy Managing Director; Ranil Salgado, Mission Chief to Japan.*

---


## References

- [Gita Gopinath](https://www.imf.org/en/about/senior-officials/bios/shirin-hamid)
- [Japan: Staff Concluding Statement of the 2023 Article IV Mission](https://www.imf.org/en/news/articles/2023/01/25/japan-staff-concluding-statement-of-the-2023-article-iv-mission)
- [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)
- [Transcripts](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2023/01/27/tr012623-japan-press-conference-concluding-statement-2023-article-iv-mission_