• Kyodo News


The International Monetary Fund cut its growth forecast Monday for the economy to 1.4 percent for 2011, down from its previous 1.6 percent estimate in January, due to the expected negative impact of the March 11 quake on the nation’s economic recovery.

Although the macroeconomic impact on the economy of the magnitude 9.0 quake and massive tsunami that struck the northeast is projected to be limited, “uncertainty remains elevated,” the IMF said in its semiannual World Economic Outlook report.

Touching on the government estimate that the damage from the March disaster is likely to amount to 3 to 5 percent of the nation’s real GDP – roughly twice that of the 1995 Great Hanshin Earthquake – the fund said the forecast did not include the effects of possible power shortages and ongoing risks associated with a nuclear crisis in Fukushima.

The IMF’s estimate that economic growth will slow to 1.4 percent this year from 3.9 percent in 2010 is seen as quite optimistic, as it is based on the assumption that the power shortages and nuclear crisis will be resolved within a few months. The IMF also anticipates the economy will expand 2.1 percent in 2012, up 0.3 percentage point from its January projection, on back of the country’s rebuilding efforts.

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