Speech

Japan and the IMF: Working Together to Promote Inclusive and Sustainable Growth

November 7, 2017

As prepared for delivery.

I. Introduction & Theme 

Vice Minister Asakawa, Honored Guests, Ladies and Gentlemen—Good morning! Ohayo gozaimasu. 

Thank you, Chikahisa, for the warm introduction, and thank you to all my colleagues at the IMF Regional Office for Asia and the Pacific for organizing this important conference. 

It is wonderful that our discussions are being held at this special time of the year. If autumn is in the air, it must be time for the Gakuensai, the immensely popular university festivals organized by students.

These Gakuensai festivals are forward-looking in their display of cutting-edge academic work. They are also firmly grounded in shared experiences, from dance performances to food stalls with delicious traditional dishes.

“Forward-looking” and “firmly grounded in shared experiences”—that is a fitting description of the partnership between Japan and the IMF that has been forged over the past 65 years.

Japan as a founding member of the IMF has throughout been a steadfast supporter of the Fund’s work—from our analysis and policy advice, to financial assistance, to helping our members strengthen economic governance and institutions.

This commitment to active IMF membership has given Japan a powerful and influential voice in the constantly evolving debate about the shape of the global economy.

By working together, we have contributed to economic transformations—here in Japan, in the Asia Pacific region, and across the globe.

We have traveled this route together; we have changed and adapted—while staying true to our core principles.

Back in 1964, at the IMF Annual Meetings in Tokyo, Prime Minister Hayato Ikeda said that “the vital challenge which we all face, whether domestically or internationally, is to promote stable economic growth and reduce the disparity between the rich and the poor.”

And more recently, Prime Minister Abe has reinforced this approach through far-reaching reforms, including an increased focus on women’s economic empowerment.

Inclusiveness and economic stability have been at the heart of our shared experiences. They remain our main priorities as we move forward.

So, today I would like to talk about how we can strengthen our partnership and how we can use our combined experiences to promote more inclusive and sustainable growth.

II. Shaping the Future of the Asia Pacific Region

Let me start by focusing right here on the world’s most dynamic region.

Over the past three decades, Asia has helped transform the world—from creating the world’s largest middle-classes, to driving the greatest poverty reduction in the history of mankind.

Over the past decade, Asia has energized the world by contributing two-thirds of global growth, while other regions were experiencing weak recoveries.

The good news is that the global economy is expected to grow faster this year and next—3.6 percent and 3.7 percent—positive momentum that is reinforcing stronger growth in Asia.

This offers policymakers a major opportunity to build on the progress made so far, while addressing current challenges. These include demographics and productivity, the two longer-term issues that are critical for all economies in the region.

Countries with young and growing populations, such as India and Indonesia, can seize this opportunity to reap a “demographic dividend.”

At the same time, countries such as China, Japan, and Korea, can take steps to mitigate the economic effects of rapidly aging populations.

And across Asia, there is room to reenergize productivity growth to ensure higher living standards in the future.

Japan at the forefront

So how can Asia meet these challenges? While there is no single policy recipe in this incredibly diverse region, all countries can benefit from sharing their experiences.

Of course, Japan has some of the world’s richest policy experiences—from being Asia’s original emerging market, to being at the forefront of policy innovations to manage demographic and productivity trends.

A good example is Japan’s focus on scientific and technological innovation. This includes public initiatives to promote a “fourth industrial revolution,” from artificial intelligence, to big data, to robotics, to biotech.

And I look forward to the 2020 Tokyo Olympics, where Japan is looking to showcase its engineering excellence—with plans ranging from large, free-floating holograms in the air, to building a flying car in time to light the Olympic flame.

Another good example of policy innovation is Japan’s commitment to boost the proportion of women in the workforce.

Over the past five years, the number of female workers increased by 1.6 million, not least because of supportive policies. Now there is room to further increase the focus on expanding access to childcare, reducing long working hours, and promoting “equal pay for equal work.”

This can truly be a game changer for Japan. It would lift potential growth and improve inclusivity.

Empowering women and fostering more inclusive growth is the right thing to do—both morally and economically—especially in countries where inequality is high and rising.

Last year, for example, the combined wealth of 637 Asian billionaires increased by almost a third to US$2 trillion[1]—just a bit less than India’s GDP, where the population is 1.3 billion.

To put it simply—and as IMF research has shown—when the benefits of growth are shared more broadly, growth is stronger, more durable, and more resilient.

For many countries in Asia, this means retooling tax systems and spending policies. It means putting a greater emphasis on policies such as conditional cash transfers for low-income families and expanding access to health services and high-quality education.

Cross-country sharing of these experiences and what policies have worked is critical—in Asia and across the globe.

III. Fostering Stronger Cooperation

a) Asia, Japan, and the IMF

That is why the IMF is deeply engaged in sharing policy ideas and best practices—and in helping our members boost their capacity for sound economic management.

For example, we have drawn on our global experience to: work with the National Bank of Cambodia to modernize its financial system; help countries raise public revenues more efficiently; and train nearly 30,000 individuals through free online economics courses.

These are only some of our capacity development efforts to help countries build more inclusive and sustainable economies.

This work lies at the heart of our partnership with Japan. It is a vital part of our shared experiences.

It is our very own Gakuensai festival that brings us closer together—and not just for the delicious Japanese food.

Over the past three decades, Japan has contributed about $600 million to our capacity development efforts—benefiting more than 130 countries and contributing to economic transformations, especially here in Asia.

On behalf of our entire membership of 189 countries, I would like to express my sincere gratitude to the government of Japan—and the people of Japan—for their exceptional support.

This includes direct support for capacity development, as well as support for the IMF’s work more generally.

We are especially grateful for Japan’s steadfast backing of our Regional Office for Asia and the Pacific here in Tokyo, which has underpinned our engagement with Asia, and whose 20^th anniversary we are celebrating here today.

b) The Global Economy and the IMF

Of course, our partnership with Japan is not only about Asia. It is also about the global economy.

Think of our joint efforts to achieve the Sustainable Development Goals, building on Japan’s longstanding commitment to assist low-income countries. Or think about our cooperation on international taxation, our fight against money laundering and terrorist financing, and our shared responsibility to address climate change.

On that point, our estimates suggest that a 1 degree Celsius increase in a country with an average annual temperature of 25 degrees—such as Bangladesh, Haiti, or Gabon—could reduce per capita GDP by nearly 1.5 percent.[2]

These and other global challenges require stronger international cooperation. We know from our shared experience that cooperation works. But how can we strengthen the multilateral system that has underpinned the global economy for more than 70 years?

One avenue is to encourage better trade deals. For example, the planned agreement between Japan and the European Union signals a fresh approach in its provisions on antitrust, corporate governance, and sustainable development.

We are also stepping up efforts to strengthen the global financial safety net, building on our partnership with Japan:

• Back in 2009, Japan committed $100 billion for IMF lending programs, encouraging other countries to help bolster the Fund’s resources during the financial crisis.
• We are now working with Japan to deepen our engagement with regional financial arrangements—to help ensure that the various layers of the global safety net work together seamlessly.

Above all, we are constantly pushing ourselves and our members to reach across borders and learn from each other—not just through international conferences and sharing best practices, but through personal relationships.

For instance, whenever my colleagues visit government institutions here in Japan, they always encounter people with IMF work experience. Why? Because over the past 10 years alone, some 150 Japanese economists have worked at the Fund.

And I am proud to be part our shared personal experiences.

I have learned so much from my Japanese colleagues—from staff economists, to our Japanese Executive Director Masaaki Kaizuka, to my colleague on the management team Mitsuhiro Furusawa and his predecessors.

In other words, this is a partnership that is built on “heart-to-heart communication” — I-shin-den-shin.

IV. Conclusion

Let me conclude with an ancient Japanese moral principle: “Cherish the harmony among people.”[3]

This spirit is deeply rooted in Japanese communities and culture. It also captures the essence of our partnership with Japan: a friendship that can help foster a deeper understanding and trust among all nations.

By working together, by trusting each other, we can help create a harmonious economy—one in which all people can benefit. 

Thank you very much — domo arigato gozaimasu.

[1] UBS/PwC Billionaires Report, 2017.

[2] IMF, World Economic Outlook (Washington: September 2017), Chapter 3.

[3] From a 1,400-year-old codex of moral principles.