Japanese economy to grow 1.7% in 2010: IMF

The International Monetary Fund (IMF) has raised its growth forecast for the Japanese economy to 1.7 per cent for 2010, but has warned of an "uncertain" economic outlook.

The multilateral lending agency had earlier projected the economy to expand at a rate of 0.5 per cent next year.

The IMF in a statement on Thursday said the country's GDP is expected to grow 1.7 per cent in 2010.

Noting that "the outlook is exceptionally uncertain," the agency pointed out various risks, including "worsening labour market conditions, tight financial markets, and global uncertainty" for the economy.

There is also a "need for policies to remain flexible if recovery fails to take hold," it added.

According to the agency, the world's second largest economy is projected to shrink 6 per cent in 2009.

On Wednesday, the Bank of Japan said that the country's economy conditions have "stopped worsening".

The bank noted that public investment is increasing and exports and production are picking up.

The bank said that the economy would start recovering from the "latter half of fiscal 2009" mainly on account of measures taken by the government to stabilise the financial system.