IMF warns risks to Japan have increased amid trade tensions

TOKYO (Reuters) – The International Monetary Fund (IMF) warned on Thursday that the balance of risks facing Japan has tilted to the downside, citing uncertainty over the impact of a planned sales tax hike and global trade tensions.

Sharper-than-expected volatility in private consumption due to the planned tax hike next year could dent growth momentum, while weaker global demand and uncertainty over trade tensions could trigger yen spikes, hit stock markets and revive deflationary risks, the IMF said.

An accommodative monetary policy should be maintained in Japan, the IMF said in a statement after its “Article 4” annual consultations on economic policy with Japanese policymakers.

However, continued monetary accommodation could encourage financial institutions to engage in excessive risk taking, it said.

“Fiscal sustainability concerns and associated bond market stress could have adverse feedback effects on the financial system and the real economy,” it added.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.