IMF raises Japan’s growth forecast for 2026 to 0.7%

The International Monetary Fund announced on Tuesday that it has raised its forecast for Japan's economic growth in 2026 to 0.7%, an increase of 0.1 percentage point from the July projection. This projection, detailed in the IMF's World Economic Outlook report, attributes the rise to fiscal support measures that have mitigated the impact of higher energy prices. For 2027, the growth rate is expected to remain at 0.7%, unchanged from the earlier forecast.

The report suggests that Japan's growth will stabilize at this level next year as the energy shock diminishes and monetary policy gradually moves towards normalization. Turning to global growth, the IMF has lifted its outlook for 2026 by 0.1 percentage point to 3.1%, while the 2027 forecast remains steady at 3.4%. The organization attributes the resilience of global economic activity to substantial investment in artificial intelligence, which has helped offset the damage caused by disruptions stemming from geopolitical factors.

Despite these positive indicators, the IMF warns that risks are predominantly on the downside. An escalation in the Middle East could negatively impact growth, while reassessment of AI-related profitability and productivity prospects could lead to a significant reduction in investment.