The International Monetary Fund (IMF) recently cut its world economic outlook owning to an extended period of global growth slowdown, which has made the world economy more exposed to negative shocks and raised the risk of stagnation. In its quarterly update to the World Economic Outlook, the fund expects the world economy to grow 3.2% in 2016 instead of 3.4% projected in January. The IMF hinted that one of the biggest economic disappointments may come from Japan. The fund not only cut its GDP forecast for Japan this year, it also sees the economy shrinking slightly in 2017. The IMF identified an increase in the sales tax, the recently stronger yen and weaker demand from emerging economies as reasons for this cut. Japan has long been entangled in feeble growth and deflationary pressure. Japan’s prime minister, Shinzo Abe, implemented a series of stimulus programs, popularly known as Abenomics, which involved a combination of aggressive quantitative easing policies from BOJ, increased public infrastructure spending and a boost to exports (read: Yen ETF Gains on Bank of Japan Stimulus Changes). In fact, earlier this year, Bank of Japan’s (BOJ) move to impose a negative interest rate for the first time in its history took the markets by surprise. However, the effectiveness of negative rates and monetary policy easing is yet to be proved. And now the lower GDP expectation by the IMF comes as a huge disappointment (read: Japan ETFs to Buy on Negative Interest Rates). Below, we have highlighted some Japan focused ETFs that could be impacted by the potential slowdown (see: all Developed Asia-Pacific ETFs here). The ultra-popular fund iShares MSCI Japan ETF (EWJ) has a total asset base of $16.2 billion. This fund tracks the MSCI Japan Index and holds 318 stocks in its basket. Though it is slightly skewed toward the top firm – Toyota Motor – at 5%, other firms do not account for more than 2.11% of assets. It trades in heavy volume of 44.4 million shares per day and charges 47 bps in annual fees. The fund has a Zacks ETF Rank #3 or ‘Hold’ rating with a Medium risk outlook. Apart from EWJ, Japan hedged funds – WisdomTree Japan Hedged Equity Fund (DXJ) with an asset base of $8.9 billion, db X-trackers MSCI Japan Hedged Equity (DBJP) with AUM of $1.2 billion and iShares Currency Hedged MSCI Japan ETF (HEWJ) with AUM of $519.3 million could also be affected (read: Q1 ETF Asset Report: Safe Havens Pop; Currency Hedged Drop). Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report ISHARS-JAPAN (EWJ): ETF Research Reports WISDMTR-J HEF (DXJ): ETF Research Reports DEUTS-XT MS JPN (DBJP): ETF Research Reports ISHA-CH MS JAP (HEWJ): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report