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WASHINGTON – Japan's gross domestic product could fall by more than 25 percent in the next 40 years, the International Monetary Fund (IMF) said Wednesday, calling on the government to boost productivity through structural reform aimed at to mitigate the damage.
The rapid aging of the population and the contraction of its population "imply a proportional slowdown in real output" as part of current policies, the IMF said in its annual report. The organization consults the member countries every year to get an idea of their economic conditions.
Structural reforms are essential to prevent the economy from slowing down too much, the report said. He pleaded in favor of a commitment to equal pay for equal work between permanent and irregular workers, on which Japan enacted a law in June, and changes in tax rules and regulations. that discourage married women from seeking full-time work.
These efforts, combined with reforms in corporate governance and trade liberalization, could "increase real GDP by 15 percent in 40 years" compared to the baseline, the IMF said.
The organization predicted that the Japanese economy would grow by 1.1% in 2018, but only 0.9% in 2019, due to the rise in the consumption tax scheduled for October. While the IMF has pushed for the rise, he nevertheless warned that this decision could lead to a contraction of the economy. He supported Prime Minister Shinzo Abe's proposal to reduce taxes on homes and vehicles to mitigate the shock.
In terms of monetary policy, the IMF said the Bank of Japan should maintain its "accommodative" position instead of tightening its belt too soon. Although the lowest interest rates have weighed on small lenders, the IMF said the government "should encourage regional financial institutions to adapt their business models to dominant demographic trends," including through the use of technology. to diversify their sources of income.
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