NIPPON



 

The Organization for Economic Cooperation and Development suggested in a report Wednesday that Japan's macroeconomic policies "be calibrated carefully."

As the East Asian economy is shifting toward "a new equilibrium in terms of higher prices and wages," careful policy adjustments are required to "balance keeping inflation around the 2 pct target (set by the Bank of Japan), ensuring fiscal sustainability and boosting potential growth notwithstanding an aging population," according to the OECD Economic Survey of Japan.

The OECD expects Japan to post "moderate but robust" growth through 2027 supported by domestic demand.

But the forum of advanced economies has revised down its 2026 forecast for the country's real growth to 0.7 pct from 0.9 pct it projected in March, due chiefly to surging crude oil prices since the start of the ongoing war in Iran.
"Downside risks are elevated," it said in the report.

Expecting that "price pressures will increase in the near-term due to higher energy prices," the report underscores the importance of continuing gradual monetary policy normalization and keeping inflation in the vicinity of the target.