WASHINGTON: Japan's economy is expected to recover moderately but policymakers are vigilant against risks such as a renewed yen spike or a resurgence of Europe's sovereign debt crisis that could hit global growth, Finance Minister Jun Azumi said on Saturday.
Azumi also warned European policymakers against complacency, pointing to recent rises in sovereign debt yields as an indication that the region's debt crisis continues to pose "considerable" risk to the global economy.
"Policymakers of individual countries (in Europe) should avoid slipping into complacency and exploit the temporary breathing space that was acquired by the efforts made so far," such as the central bank's easy monetary policy and the boosting of the euro zone's firewall, he said in a statement delivered to the International Monetary and Financial Committee, the IMF's governing committee.
Azumi also called for European financial regulators to ensure that rules are not strengthened in a way that would cause a "disorderly deleveraging" by the region's banks as they try to trim assets to bolster their capital base.
On Japan's economy, Azumi said it was expected to achieve real GDP growth of 2.2 percent in the current fiscal year that began this month, led by increased spending for rebuilding from last year's earthquake.
"At the same time, we are vigilant against risks, such as a resumption of the yen's sharp rise, a downturn in overseas economies due to the possible resurgence of the European sovereign debt crisis, and persistently high and volatile oil prices," he said.
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