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2ND LD: IMF to raise projection for Japan's 2006 growth rate+(Japan Economic Newswire Via Thomson Dialog NewsEdge)TOKYO, Feb. 28_(Kyodo) _ (EDS: MORE INFO IN LEAD AND 8-11TH GRAFS) The International Monetary Fund is expected to sharply raise its projection of a 2.0 growth rate for Japan's economy this year when it issues its next biannual report in April, senior IMF officials said Tuesday. "I welcomed the recent strong and broad-based economic growth in Japan, and we agreed that the economy should continue to recover steadily," IMF First Deputy Managing Director Anne Krueger said after meeting in Tokyo with Japanese Finance Minister Sadakazu Tanigaki and Vice Finance Minister for International Affairs Hiroshi Watanabe. David Burton, director for the IMF's Asia and Pacific Department, said at a press briefing with Krueger that he believes the IMF will "significantly" upgrade its outlook for Japan's economy in 2006 from the 2 percent growth it projected in its World Economic Outlook released last September. Japan's 2006 growth rate is likely to be "quite a bit higher" than 2 percent, Burton said. He stopped short of presenting specific figures. The two IMF officials are currently on a visit to Tokyo through Wednesday to take part in a two-day workshop of the Group of 20 nations on reforms of the IMF and World Bank. The officials' upbeat outlook reflects Japan's gross domestic product data for the October-December quarter, which showed an annualized 5.5 percent growth in real terms, outpacing the growth rates of the United States and Europe. The robust data, released Feb. 17, provide yet more evidence that Japan has overcome an economic slump of more than 10 years and entered a phase of sustainable growth where healthy corporate earnings lead to higher wages and increased consumption, which in turn generates fresh demand and boosts corporate profits. While declining to comment on the timing of the Bank of Japan's likely end to its quantitative credit-easing policy, Krueger said the central bank "could consider" adopting inflation targeting as a policy tool once the economy fully overcomes deflation. "I don't think one can say here is a roadmap all the way through because there are too many uncertainties," she said. "But I think going forward, as one gets out of the range where one is worried about deflation and then once again get to...normal monetary policy, it could make great sense to move toward inflation targeting." Private demand-led economic growth and year-on-year rises in consumer prices have fueled speculation that the BOJ will scrap its five-year-old policy to pump excess liquidity into the financial system at its policy board meeting March 8-9 or the next gathering April 10-11. Some lawmakers have requested that the BOJ consider setting an inflation target or a price-reference target to boost transparency in managing its monetary policy after the envisaged policy shift. On the global economy, Krueger said, "The outlook is very positive," and that increases in oil prices "seem to have been absorbed" without pushing up inflation rates and sharply slowing growth. She cited further rises in oil prices from the current near record-high levels and a possible avian flu pandemic as major risk factors to the world economy. According to the World Health Organization, more than 90 people, mostly in Asia, have died from the H5N1 strain of avian flu. Experts fear the deadly strain may mutate into a form that can easily spread among humans, triggering a pandemic that could kill millions. |