Japan will surpass US economic growth this year as it recovers from its decade-long recession, the International Monetary Fund (IMF) has predicted. IMF argued that rising private investment, strong corporate profits and a pick up in exports would drive growth to 2.3 percent. The IMF in its latest World Economic Outlook has slashed its projection for US growth to 2.2 percent, following growing troubles in the housing market. However, it also indicated that Japan might then skid back behind the US in 2008 with growth moderating to 1.9 percent. The report further said that Japan’s recovery slowed down significantly for some time in the middle of 2006, following a sharp decline in consumption, nevertheless the economy bounced back robustly in the last three months of the year. The fund said, ‘Near-term prospects depend crucially on whether the rebound in consumer spending in the fourth-quarter is sustained’. For sustained consumption rate the fund has suggested that Japanese economy should try to employ more people in economic activity to increase spending in the economy. In addition, the report outlined that resurgence in domestic Japanese consumption is likely to for the most part counterbalance some dampened exports in the wake of the projected moderation in global growth, which is likely to ease to 4.9 percent in 2007 and 2008, half a percentage point less than 2006. The IMF’s chief economist, Simon Johnson, speaking at a press conference expressed his confidence in Japanese economy as the fund observed that Japan was following an effective monetary policy that could help to sustain growth in its economy. Simon Johnson further said, ‘We think that their priorities are exactly right. They are focused on fiscal consolidation, on improving public finances, and at the same time they are trying to nurture their economic recovery. The chief economist added that the IMF thinks that Japan has tremendous fundamentals and with the current stance of fiscal and monetary policy the fund is quite optimistic that growth will be sustained in Japan.