Standard Chartered revises Japan’s economic growth forecast for 2024 to 0.0% from 0.6% on weaker first-half performance and GDP revisions. The economy is expected to gradually recover, driven by domestic consumption. The bank also raises CPI forecasts due to sticky inflation from wage growth and reduced utility subsidies.
In a statement, Standard Chartered’s macro analyst, Chong Hoon Park, mentions, “We lower our 2024 GDP growth forecast to 0.0% from 0.6% on a weaker-than-expected H1 performance and likely diminished growth momentum in H2. We expect the Bank of Japan to maintain a hawkish policy stance due to concerns over persistent inflation and its impact on domestic consumption and investment. Consequently, we raise our CPI inflation forecast for 2024 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 higher our 2026 CPI inflation forecast to 2.0% from 1.8%.”
The economy is showing signs of recovery with fiscal policies, improved employment, and income, leading to a revised growth forecast of 1.3% for 2025 and 1.0% for 2026.
Following statistical revisions to GDP data by the Cabinet Office, the Bank of Japan adjusted its growth forecast for FY24 by 0.2ppt to 0.6%, attributing the revision to changes in GDP statistics rather than a shift in the overall economic outlook.
In summary, Japan’s economy is facing challenges with lower growth forecasts and persistent inflation. Investors should monitor the situation closely and consider adjusting their investment strategies accordingly to navigate the changing economic landscape.