(Adds details on European farmer protests)
By Andrea Shalal
WASHINGTON, Feb 22 (Reuters) – The International Monetary Fund on Thursday said Japan’s weaker economic performance in 2023 could add to downside risks in 2024, while high-frequency indicators were pointing to a recovery in Britain this year.
IMF spokesperson Julie Kozack told reporters the global lender would take new information on the Japanese and British economies – which both slipped into recession – into account as it prepared a new global forecast to be released in April.
She noted that inflation had been coming down, but the “job is not yet done on monetary policy,” and said the IMF was urging central banks to guard against premature easing of interest rates.
Where underlying inflation and inflation expectations were clearly and decisively moving toward target levels, some adjustments of monetary policy “may be warranted,” she said.
Kozack also noted that monetary policy was becoming less synchronous, with some emerging market economies starting to lower interest rates while some advanced economies were holding off to ensure that inflation pressures eased.
Japan unexpectedly slipped into a recession at the end of last year, losing its title as the world’s third-biggest economy to Germany and raising doubts about when the central bank would begin to exit its decade-long ultra-loose monetary policy.
Some analysts are warning of another contraction in the current quarter as weak demand in China, sluggish consumption and production halts at a unit of Toyota Motor Corp all point to a challenging path to an economic recovery.
Kozack said Japan’s weaker-than-expected output in the second half was driven by weak domestic consumption and investment, although growth in 2023 as a whole remained robust thanks to strong exports.
“We see that the weaker performance in 2023 may add to downside risks to the Japan economy,” she added, without elaborating.
Kozack said the IMF did not expect farmers’ protests in France and Spain and elsewhere in Europe to have much impact on those countries’ economic output given the small role agriculture plays there.
But she said there could be “significant impact” on prices if the protests persisted for some time.
The IMF is expected to issue a report on the global economy early next week ahead of a meeting of Group of 20 finance officials in Sao Paolo, Brazil on Feb. 28-29.
IMF Managing Director Kristalina Georgieva will travel to Brazil next week to speak with G20 officials about the global economy and the challenges it faces, Kozack said. (Reporting by Andrea Shalal; Editing by Andrea Ricci)
