The IMF’s latest World Economic Outlook presents two contrasting outlooks for the largest economies in the Asia-Pacific region. Essentially, China’s growth path will stabilise around 6.5% in 2016 while Japan is expected to see 0.5% growth in 2016, followed by a 0.1% y-o-y decline in growth in 2017.
Looking closer at the data, the IMF’s releases over the past year tell a story of a steady decline in optimism in the potential of Abenomics to deliver a sustained improvement in Japan’s economic growth. In part, this stems from weaker consumption growth and corporate pessimism.
IMF Forecasts for Japan’s 2016 GDP Growth (YoY, %), Q1 2015-Q2 2016
In comparison, China’s prospects appear to be holding up well, settling around 6.5% for 2016, compared with 2016 expectations for 6.2% in their previous report. Increased government stimulus, weaker monetary policy and a rebounding real estate market are supporting the outlook for China in 2016.