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IMF upgrades Japan forecast

The International Monetary Fund (IMF) has upgraded its growth forecast for Japan for 2010 from 0.5% to 1.7%.

In its annual assessment, the IMF said it expects Japan’s economy to contract by 6% in 2009 and warned of the need for further measures should the outlook deteriorate.

Adjustments in production and the Japanese authorities’ strong fiscal response were given as the reasons for the upgrade in the IMF’s forecast for 2010.

Although the IMF says it expects a sustained recovery to take hold next year, in-line with a projected global pickup, it added “the outlook is exceptionally uncertain”. Worsening labour market conditions, tight financial markets and global uncertainty are all risks that remain, it said.

“A longer or more severe recession could call for additional targeted and reversible measures next year,” said the report.

The report also projected that Japanese prices will continue to fall until 2011.

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