Standard Chartered lowers its 2024 growth forecast to 0.0% from 0.6% due to weaker growth in the first half and statistical revisions to GDP. Japan’s economy is likely to recover gradually, supported by domestic consumption. Standard Chartered raises its CPI forecasts due to still-persistent inflation on the back of wage growth and reduced utility subsidies, says Standard Chartered macro analyst Chong Hoon Park.
The second half will be better than the first, but not strong enough
“We lower our 2024 GDP growth forecast to 0.0% from 0.6% due to a weaker-than-expected first-half performance and likely lower growth momentum in the second half. We expect the Bank of Japan (BoJ) to maintain a hawkish monetary policy stance due to concerns about persistent inflation and its impact on domestic consumption and investment. Accordingly, we raise our 2024 CPI inflation forecast to 2.5% from 2.4% as inflation remains stubbornly high, driven by wage increases and the phasing out of government energy subsidies. We also revise up our 2026 CPI inflation forecast to 2.0% from 1.8%.”
“That said, Japan’s economy is gradually recovering, supported by fiscal policies and an improvement in employment and incomes. As a result, we revise our 2025 growth forecast to 1.3% from 1.1%. We also raise our 2026 growth forecast to 1.0% from 1.2% due to base effects.”
“Following statistical revisions to GDP data by the Cabinet Office, the BoJ revised down its growth forecast for fiscal year 2024 (year ending March 2025) by 0.2 percentage point to 0.6%, stressing that the revision is mainly due to changes in GDP statistics rather than a change in the overall economic outlook.”
Source: Fx Street
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