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Japan : 2017 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Japan


International Monetary Fund. Asia and Pacific Dept

Publication Date:

July 31, 2017

Electronic Access:

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Abenomics has improved economic conditions and engendered structural reforms but has not yet achieved a durable exit from deflation. The economy has expanded at a pace above potential the last five consecutive quarters, and unemployment has fallen to record low levels. Short-term fiscal stimulus and rising global demand have been key drivers. However, inflation, public debt sustainability, and growth objectives remain to be secured. Risks to the outlook are tilted to the downside, particularly in the medium term. The current favorable economic environment is an opportunity to accelerate reforms. A comprehensive and mutually reinforcing package of accelerated structural reform, coordinated demand and income polices, strengthened policy frameworks, and enhanced financial sector policies is needed. The reform agenda should prioritize structural measures aimed at facilitating reflation (particularly labor market reforms to boost wages), followed by policies to lift potential growth.