IMF Reverses Outlook on Japanese Economy, Urges Action on Debt

Posted June 8th, 2011 at 7:10 am (UTC-5)
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The International Monetary Fund is urging Japan to adopt more aggressive measures to rein in the country's massive public debt.

The IMF issued a revised economic forecast for Japan Wednesday, saying its economy will shrink below one percent this year due to March 11 earthquake and tsunami. The fund had earlier predicted Japan's economy would grow by 1.4 percent.

But the IMF says the economy will rebound once the reconstruction efforts begin later this year, and expects it to expand 2.9 percent in 2012.

The fund is calling on Tokyo to increase its five percent consumption tax as part of a “more ambitious medium-term strategy” to trim the deficit, which is currently 200 percent of its gross domestic product, the biggest in the world's industrialized nations.