Wednesday, June 8, 2011

Kyodo news, The Associated Press, Bloomberg: World Bank , IMF dismal on Japan growth potential

 Washington — The World Bank said Tuesday that it projects Japan's economy to expand 0.1 percent this year in terms of real gross domestic product, a plunge from an estimated 4.0 percent in 2010, following the March 11 earthquake and tsunami.

                                                                                                                 Photo: Getty Images

 Given the expected strong domestic demand in rebuilding the country, however, the economy is likely to grow 2.6 percent in 2012 and 2.0 percent the following year, the World Bank's latest Global Economic Prospects report showed.
 "Recent events in Japan and the political turmoil in the Middle East and North Africa have cut sharply into domestic growth," the report said.
 The Washington-based entity forecasts growth in the Middle East and North Africa to be 1.9 percent for 2011, down from the 3.1 percent expansion it projected last year.
 The report also notes that if the nuclear crisis deteriorates, or if the nuclear pollution that has already occurred requires extended cleanup efforts, a longer-term impact could be felt.
 Separately, the International Monetary Fund said Japan's economy will shrink 0.7 percent this year due to the quake and tsunami disasters, but forecast growth to bounce back in 2012 as rebuilding gets under way.
 It also said Wednesday that Tokyo should raise its sales tax next year to help finance reconstruction projects and rein in its bulging national debt, the highest among advanced economies.
 The IMF slashed Japan's economic forecast from its previous projection for 1.4 percent growth in April.
 But the economy is expected to recover "sharply" over the summer as rebuilding kicks in and supply constraints ease. In 2012, the economy is expected to grow 2.9 percent, up from an earlier forecast of 2.1 percent, the Washington-based body said.
 "Japan's economy continues to face headwinds from the earthquake but should start to recover strongly in the second half of the year," the IMF said in a statement after a team visited Tokyo.


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