The head of the International Monetary Fund (IMF) said yesterday he expected the Japanese economy to grow at least 3 percent this year while endorsing the country's recent massive forex market intervention to stabilize the financial system and fight deflation.
"In our view the number goes more to 3 percent, possibly even beyond that," IMF managing director Horst Koehler told reporters on a two-day visit to Japan.
The fund's new projection was revised up from an estimate late last year that the world's second largest economy would grow 2.2 percent this year.
Last week Japan said the economy grew 1.7 percent in three months to December for an annualized rate of 7 percent, the fastest rate in 13 years, boosted by robust exports as well as recovering investment in factories and offices.
"While the growth partly reflects strong external demand, including from China, it is encouraging that business sentiment has been contributing importantly to the recovery," Koehler said in a speech.
"The message from these developments is that Japan's efforts to promote economic recovery, including through structural reforms, are beginning to pay off," he said, adding the global upturn would help Tokyo press ahead with reforms that should lead to sustainable growth.
"With the major banks having made significant headway in improving their balance sheets, we look forward to a more broad-based strengthening of the banking system," he said.
The Bank of Japan's policies have contributed to the improved economic outlook, Koehler said.
The central bank has been tackling deflation by offering commercial banks massive amounts of funds as there is little room for cutting Japan's interest rates, which are about zero percent for overnight lending.
Asked about Japan's massive foreign exchange market intervention to sell the yen in the past year, Koehler said it was a pragmatic policy which should help stabilize the country's financial system and fight persistent deflation.
"I do think that it was an appropriate policy stance," he said, adding, however, that he believed it should be a temporary action and not targeted at specific exchange rates.
Japan spent ?7.15 trillion (US$67 billion) in January alone in market intervention, according to the finance ministry.
Last year, Japanese monetary authorities used a record ?20.06 trillion in an effort to stem the yen's rise against the dollar, far exceeding the previous record of ?7.64 trillion in 1999.
Koehler said that in the circumstances of super-low interest rates, Tokyo had few options.
NO HUMAN ERROR: After the incident, the Coast Guard Administration said it would obtain uncrewed aerial vehicles and vessels to boost its detection capacity Authorities would improve border control to prevent unlawful entry into Taiwan’s waters and safeguard national security, the Mainland Affairs Council (MAC) said yesterday after a Chinese man reached the nation’s coast on an inflatable boat, saying he “defected to freedom.” The man was found on a rubber boat when he was about to set foot on Taiwan at the estuary of Houkeng River (後坑溪) near Taiping Borough (太平) in New Taipei City’s Linkou District (林口), authorities said. The Coast Guard Administration’s (CGA) northern branch said it received a report at 6:30am yesterday morning from the New Taipei City Fire Department about a
IN BEIJING’S FAVOR: A China Coast Guard spokesperson said that the Chinese maritime police would continue to carry out law enforcement activities in waters it claims The Philippines withdrew its coast guard vessel from a South China Sea shoal that has recently been at the center of tensions with Beijing. BRP Teresa Magbanua “was compelled to return to port” from Sabina Shoal (Xianbin Shoal, 仙濱暗沙) due to bad weather, depleted supplies and the need to evacuate personnel requiring medical care, the Philippine Coast Guard (PCG) spokesman Jay Tarriela said yesterday in a post on X. The Philippine vessel “will be in tiptop shape to resume her mission” after it has been resupplied and repaired, Philippine Executive Secretary Lucas Bersamin, who heads the nation’s maritime council, said
REGIONAL STABILITY: Taipei thanked the Biden administration for authorizing its 16th sale of military goods and services to uphold Taiwan’s defense and safety The US Department of State has approved the sale of US$228 million of military goods and services to Taiwan, the US Department of Defense said on Monday. The state department “made a determination approving a possible Foreign Military Sale” to the Taipei Economic and Cultural Representative Office in the US for “return, repair and reshipment of spare parts and related equipment,” the defense department’s Defense Security Cooperation Agency said in a news release. Taiwan had requested the purchase of items and services which include the “return, repair and reshipment of classified and unclassified spare parts for aircraft and related equipment; US Government
More than 500 people on Saturday marched in New York in support of Taiwan’s entry to the UN, significantly more people than previous years. The march, coinciding with the ongoing 79th session of the UN General Assembly, comes close on the heels of growing international discourse regarding the meaning of UN Resolution 2758. Resolution 2758, adopted by the UN General Assembly in 1971, recognizes the People’s Republic of China (PRC) as the “only lawful representative of China.” It resulted in the Republic of China (ROC) losing its seat at the UN to the PRC. Taiwan has since been excluded from