| Japan: Staff Concluding Statement of the 2024 Article IV Mission
February 8, 2024--The Japanese economy continues to recover from the pandemic. Initially driven by cost-push factors, inflation is becoming demand driven with the output gap closed and labor shortages intensifying . In the near term, the focus should shift to tighten fiscal policy and wind down unconventional monetary policy, while maintaining financial stability. |
| In the medium term, the priority is to rebuild fiscal buffers, strengthen the fiscal framework, and advance structural reforms, with labor market reforms at the forefront, to support potential growth.
RECENT DEVELOPMENTS, OUTLOOK, AND RISKS The economic recovery picked up in 2023 and the output gap is estimated to have closed. Core inflation (excluding fresh food and energy) seems to have peaked at a high level and is becoming demand driven. |