Don’t let the naysayers sway you: While the Bank of Japan’s 2% inflation target remains elusive, the domestic economy is clearly picking up. If the central bank stays the course, its easy monetary policy will begin to produce more of the desired effects.
In a report due out on Thursday — the Outlook for Economic Activity and Prices — the BOJ is expected to upgrade its forecast for real gross domestic product for the fiscal year that began in April. The figure is likely to be slightly higher than the 1.5% predicted in the January edition. The inflation outlook may get a downgrade, but there is little question the economy is moving in the right direction.
The Organization for Economic Cooperation and Development and the International Monetary Fund have both upgraded their outlooks for Japan’s real growth. The IMF predicts the economy will grow by 1.2% this year, up 0.4 of a point from the January estimate of 0.8%. Japan received the second-biggest upgrade after the U.K., which was given a half-point lift.
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