Japan's economy suffered a 0.7% contraction last year after a massive earthquake and subsequent tsunami shocked the country.
Also, the IMF said while a controversial increase in Japan's consumption tax will be an important first step in demonstrating a commitment to fiscal overhaul, it won't be nearly enough to meet a needed fiscal adjustment of around 10% of gross domestic product over the next decade. Further consolidation is needed, but should be designed to limit the impact on near-term growth and improve incentives to work and invest, it said.
The IMF estimated the debt-to-GDP ratio, an indication of a country's debt health, will continue to rise toward an unsustainable rate around 170% by 2020 under the authorities' current plans. But a fiscal adjustment amounting to 10% of GDP would put the debt on a downward path.
The IMF said the Bank of Japan should further ease monetary policy to accelerate meeting its 1% inflation target. "Enhanced communication of the policy stance and framework would help achieve the goal," the IMF said, adding structural changes could help boost confidence and raise domestic demand.
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Monday, August 6
In the U.S. Fed Chairman Ben Bernanke is to speak; his comments will be closely watched for any indications of the future possible direction of monetary policy.
Tuesday, August 7
Fed Chairman Ben Bernanke is to speak at an event in Washington DC.
Wednesday, August 8
Japan is to release official data on the current account, which is closely linked to currency demand.
The U.S. is to release government data on labor costs and productivity, leading indicators of consumer inflation. The country is also to release official data crude oil stockpiles.
Thursday, August 9
Japan is to publish official data on core machinery orders, while the BoJ is to announce its benchmark interest rate. The announcement is to be accompanied by the bank's rate statement, which outlines the reasons for the bank's policy decision and discusses the economic outlook.
The U.S. is to release official data on the trade balance, the difference in value between imported and exported goods, as well as the weekly report on initial jobless claims.
Friday, August 10
The U.S. is to round up the week with official data on import prices and the federal budget balance.
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