Key Points: Implementing the RCEP would greatly benefit the global economy. Deter protectionism together with the TPP and the Japan-EU EPA Transitional measures and capacity-building support the negotiation conclusion   On July 1, Tokyo hosted a ministerial meeting of the Regional Comprehensive Economic Partnership (RCEP). This was the first ministerial meeting to be held outside the Association of Southeast Asian Nations (ASEAN). RCEP is a supra-regional economic area (a mega free trade agreement) in East Asia, the center of global economic growth. The sixteen nations participating in the negotiations account for about half of the world’s population (3.4 billion) while the GDP (about USD 20 trillion) and total trade (about USD 10 trillion) account for one third globally. If the agreement is implemented, it will have a substantial and positive impact on both the East Asian and the global economy. Regional cooperation in ... ... [Read more]

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]

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]

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]

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]

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]

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]

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]

  As HondaJet continues its successful demonstration tour of Europe, Katayama Osamu looks back on the development of the aircraft, the fastest, highest-flying, quietest, and most fuel-efficient jet in its class. A red and white aircraft landed at Haneda Airport under a blue sky on 23 April 2015. It was a proud moment for HondaJet, whose development has been ongoing for approximately thirty years, since 1986. On the first day of its world tour en route to Japan and Europe, HondaJet made its first appearance outside the United States. At the commemorative press conference on the same day, the president of Honda Motor Co., Ito Takanobu, said, “Ever since its foundation, Honda has always had a dream of flying in the sky. Today, the dream that was held by the founder, Honda Soichiro, and the dream to enter the aircraft industry, thereby achieving three-dimensional mobility, have been ... ... [Read more]

The fluctuations in the value of Bitcoin, an Internet digital currency, are becoming more and more rapid. People can use Bitcoin as money in an increasing number of shops, but is unstable Bitcoin a currency? In the modern age, the existence of currencies that were managed monopolistically by states has been shaken by technological progress. The Asahi Shimbun asked economist Iwai Katsuhito, who is known for his theory of money, about the relationships between digital currencies, central banks and states. After Bitcoin rose sharply to more than 2 million yen at the end of last year, from about 100,000 yen a year ago, it fell and showed volatile swings. Can we say that it is a new currency? Iwai Katsuhito: Since Bitcoin emerged in 2009, I have considered the possibility of it becoming a currency. But I have changed my mind in the last ... ... [Read more]