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No.47
Economy ,No.47  Jun 21, 2018

The Durability of Abenomics: Seeds of Present Gains Sown in First Abe Administration

Professor Doi Takero of Keio University speaks with Ito Takatoshi, former Vice Minister of Finance for International Affairs and Private Sector Member of the Council on Economic and Fiscal Policy. View of Current Situation Doi Takero: Five years have passed since the second Abe Cabinet initiated “Abenomics.” A diversity of views have been offered about whether any benefits have resulted from this policy package, but I wonder if you could tell us succinctly how this set of fiscal and monetary policies that go under the general name of Abenomics came into being in the first place, including what they imply for today? Ito Takatoshi: I see. I’ll try to be concise. Doi: No need to say that [laughs]. So, the key posts at the Bank of Japan have been determined, and the decision has been made for Governor Kuroda Haruhiko to continue serving. So ... ... [Read more]

Economy ,No.47
Jun 19, 2018

Asia’s Growth and Japan I: Turning the world’s factory into a center for technological innovation

East Asia has achieved sustainable economic growth by forming Factory Asia, linked through supply chains across nations. The growth of East Asia also brought significant benefits to Japan by generating demand. Over the past quarter-century, real income per capita increased 3.2-fold in East Asia, and exports from Japan to East Asia expanded 3.7 times. In recent years, nearly 10% of Japan’s income has been attributable to exports to East Asia. However, the Asian growth has slowed down lately. China’s real economic growth declined from around 10% in the 2000s to below 8% in the 2010s. Emerging economies in East Asia—such as Malaysia, Thailand, and Indonesia—have been growing at an annual rate of 3% to 5% in recent years, stopping short of serving as a robust growth engine for the region. With rapid population aging expected to occur in many countries in the region, it ... ... [Read more]

Economy ,No.47
Jun 15, 2018

Asia’s Growth and Japan II: Large Cities Enjoy the Benefits of the Demographic Bonus

Key Points: Shanghai’s per capita GDP is equal to those of high-income countries. The percentage of young people in large cities is higher than at the country level. There are concerns about the acceleration of population aging in the regional areas and agricultural villages in the near future. The future of the economies of East Asia (China, Asian Newly Industrializing Economies (NIEs) and the Association of Southeast Asian Nations (ASEAN)) depends on the cities. Back in 1950, the percentage of urbanization (the rate of the urban population to the total population) in East Asia was just 17%, well below the global average of 30%. At that time, cities were exceptional areas in East Asia. The percentage of urbanization subsequently rose rapidly, however; it surpassed 50% in 2010 and hit 57% in 2015, exceeding the global average of 54%. East Asia shifted from a rural ... ... [Read more]

Economy ,No.47
Jun 12, 2018

Asia’s Growth and Japan III: Understanding the Values Attached Locally is the Key

Key Points: A proper understanding of Asian markets is indispensable for building strategies. Values related to consumption vary from one region to another. Look for the key to adjustment to local conditions in visitors from abroad. Japanese companies’ forays into overseas markets are heating up. According to the 2017 edition of Kaigai shinshutsu kigyo soran (Source Book on Japanese Companies Expanding Operations Overseas, published by Toyo Keizai Inc.), the highest ratio of companies establishing subsidiaries abroad, 30% of surveyed firms, cited overseas market development as the objective for establishing them. Companies with subsidiaries in Asia comprised 72% of them. Asia is attracting attention to this extent. Naturally, we see many companies advancing into Asian markets to develop an overseas production network. However, we should not forget that many of the overseas manufacturing plants that those companies have established in recent years are meant for ... ... [Read more]

Economy ,No.47
Jun 09, 2018

Agenda for BOJ Governor in Second Term II: Further commitment to do whatever it takes to achieve 2% inflation target entails a risk—It is important to return to the principles of the “joint statement.”

Key Points: Inconsistent priorities have made monetary policy inflexible. The 2013 joint statement called for the establishment of a sustainable fiscal structure. A widening disparity between BOJ’s words and actual intentions appears to involve a risk. The Bank of Japan (BOJ) has demonstrated its unwavering dedication to the achievement of a 2% inflation target over the last five years. In his inaugural news conference held five years ago, Governor Kuroda Haruhiko referred to the joint statement announced by the government and the BOJ in January 2013 by saying, “It can be summed up as we will do whatever it takes to achieve 2% inflation at the earliest date possible.” Deputy Governor Iwata Kikuo also expressed his strong commitment to achieving the price stability target no matter what the situation would be by saying, “We should not make excuses by saying that it wasn’t our ... ... [Read more]

Economy ,No.47
Jun 04, 2018

Agenda for BOJ Governor in Second Term I: Japan’s Deflation Is Almost Fixed but Needs Some Modifications—No Further Reflationary Policy Required

Key Points: Avoid real wages falling amid inflation targeting Improve messaging and reduce purchases of exchange-traded funds (ETFs) Further monetary easing policy may face criticism from abroad It has been five years since Kuroda Haruhiko was inaugurated as governor of the Bank of Japan (BOJ). The government has nominated Mr. Kuroda for a second term. Mr. Kuroda’s nomination was among those submitted to the Diet, which included nominations for two new deputy governors for the bank. In this article, I intend to review the BOJ’s monetary policy over the past five years and point out challenges confronting Japan’s central bank, which will be led by the reappointed governor. BOJ Governor Haruhiko Kuroda launched a dramatic monetary policy aimed at achieving a 2% inflation rate, introducing quantitative and qualitative monetary easing (QQE) soon after he came on board in April 2013. The BOJ announced the ... ... [Read more]

Diplomacy ,No.47
May 29, 2018

Interview: Foreign Minister KONO Taro
Japan’s Diplomatic Landscape in 2018
Pushing North Korea toward Denuclearization by Applying Continued Pressure

―― Since you became Foreign Minister, your highly motivated strategic communications in Japan and abroad, as well as your active visits to foreign countries, have attracted attention. Kono Taro: Since assuming office in August 2017, I have visited numerous locations around the world, taking 13 foreign trips and visiting 25 countries (30 countries if revisits are included), as well as going to Hiroshima, Nagasaki and Okinawa in Japan. I have held more than 70 Foreign Ministers’ meetings in Japan and abroad, and have held more than 160 meetings in total, including other multilateral meetings, etc. In the process of meeting with the Foreign Ministers of other countries, I have strongly recognized that building personal relationships is very important in diplomacy. I will continue to make efforts to achieve concrete diplomatic results by solidifying personal relationships of trust and networks. ―― What kinds of diplomatic ... ... [Read more]

Economy ,No.47
May 27, 2018

Leverage Longer Lifespans to Boost Growth: Japan Center for Economic Research Medium-Term Economic Forecast
— Build working-senior friendly society

Points: Japanese economic growth rate set to slow under present circumstances Lifetime consumption rising with longer lifespans and working careers Boost consumption tax to 15% to provide for greater job diversity The Japanese economy continues to expand thanks to strong economies abroad. However, caution is still needed in assessing the medium-term economic outlook. In our Medium-Term Economic Forecast, we consider the relevant issues. World economic growth rates are rising in the short term, led by developed countries. The International Monetary Fund (IMF) revised in January their forecast a high of 3.9% world economic growth rate for 2018. Hidden in the backside, however, are a number of downside factors, and we believe that rates will slow over the medium term. The first factor is a structural one, namely the erosion of the United States potential growth rate, which gauges the long-term production capacity of the ... ... [Read more]

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