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Japan GDP growth will recover and inflation will fall

Friday, February 17, 2023


Japan's GDP growth rate for 2022 was announced the same day: 1.1%. The economy has not yet regained its 2017 output because of large pandemic-related losses and a consumption tax hike in 2019. The economy-wide price index jumped 4.4% (annualised), among the largest increases in 30 years besides those driven by tax hikes.


  • Inflation will fall in the coming months, such that the current BoJ policy will once again become consistent with actuality.
  • Monetary policy adjustment could be warranted in 2024 if businesses raise wages in the approaching negotiations, as the government urges.
  • Recent falls in inventories will likely have a positive effect on future growth as producers and sellers build back their stocks.

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