I am Yoshida, president of Yamada Shusei Ltd., a professional apparel garment repair group in Nagaoka City, Niigata Prefecture.
January 30, 2024The IMF's World Economic Outlook (WEO) January 2024 Revision has been released. From this information, we have summarized the key points that will affect the Japanese economy and hints for improving business management.
I. Organizing points affecting the Japanese economy
1) Global economic growth is solid, but inflation and fiscal tightening will be a drag
・The growth rate in 2024 and 2025 will be in the 3% range, supported by the U.S. and Chinese economies, but below the historical average.
・Inflation will rise due to supply shortages and high oil prices, and monetary policy will be tightened.
∙ Reduced fiscal support and rising debt will also weigh on economic activity.
2) A slowdown in inflation and avoidance of a hard landing will balance the risks
∙ Inflation will slow in 2024 and 2025, and inflation will continue to decline.
∙ Easing financial conditions and structural reforms could boost growth.
･Geopolitical shocks, another surge in commodity prices, and a slowdown in China's real estate sector could put downward pressure on growth.
3) Policymakers should balance inflation and fiscal policy and promote structural reforms
･Monetary policy should be adjusted in response to inflation movements and directed toward the inflation target.
･Fiscal policy should rebuild fiscal capacity, curb the growth of debt, and secure new spending.
･Structural reforms should strengthen productivity and debt sustainability and raise income levels.
II Tips for Improving Management
1）Do business from a long-term perspective without being overly pessimistic, as global economic growth is expected to slow but inflation is expected to slow and a hard landing is avoided.
2）Prepare for higher costs due to inflation and tighter monetary policy, and manage and price your business efficiently.
3）Maintain the company's own financial health and make necessary investments in response to declining demand due to reduced fiscal policy and increased debt.
4) Respond to market changes and increased competition due to structural reforms, and increase its own competitiveness and productivity.
The ability to make decisions and take action to break out of the existing shell and take on challenges will undoubtedly be tested.
