LONDON, April 29 - Japan would face"a fairly strong" recession if it were to raise interest rates, Olivier Blanchard, former chief economist at the International Monetary Fund, said on Monday.
"They're economically stuck," said Blanchard who cited the drop in workers' real wages and the country's growing deficit. The wage trend is among the key data the Bank of Japan examines for pay and inflation outlooks, crucial factors for the central bank to consider in deciding whether to unwind its stimulus policy further.
A second term posed more risk than his first because during the first term he was prevented from making policy decisions that would have adversely affected the U.S. economy, Blanchard said.
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