ANN/THE JAPAN NEWS – World Bank Deputy Chief Economist Ayhan Kose forecast that Japan’s economy will experience healthy growth over the next two years, driven by increased consumption and rising wages.
Kose also noted that the Bank of Japan (BOJ) has room to raise interest rates.
In its economic outlook, the World Bank predicts Japan’s gross domestic product will grow by 1.2 per cent in 2025 and 0.9 per cent in 2026.
In an interview with Jiji Press, Kose explained that when wage growth outpaces inflation, income earners are better positioned to spend, potentially leading to stronger economic growth.
He also stated that the BOJ has “some room to raise rates further” and will adjust its policies in the coming months as needed.
Kose attributed the recent global rise in long-term interest rates to an “unusual economic cycle,” where the United States (US) economy and inflation remain unexpectedly strong, alongside shifting expectations about the US Federal Reserve’s interest rate targets.
He also noted that the uncertainties surrounding economic, regulatory and trade policies of the administration of incoming US president-elect Donald Trump as well as fiscal deterioration in many advanced economies are affecting the “term premium” on long-term interest rates.
Kose expressed concern that the incoming US administration’s high tariff policy could further deepen the “fragmentation” of the global economy, with its impact expected to be particularly serious for developing countries.
Still, he emphasised that what they need to do, even in this difficult external environment, is to “aggressively integrate (themselves) into the global economy” and “find strategic partners”.
