Remarks by Angel Gurría
15 April 2019 - Keidanren, Tokyo, Japan
(As prepared for delivery)
Dear Sakurada-san, Ladies and Gentlemen,
It is a pleasure to be with you today. This regular dialogue between the OECD and the Japanese business community is highly valued and important.
Just few hours ago, I presented the 2019 OECD Economic Survey of Japan to journalists at the Japan Press Club. I will also be presenting it to Prime Minister Abe later this afternoon.
Let me begin with the context. The global expansion continues to lose momentum and world trade growth has slowed sharply. Trade tensions have clouded the outlook for firms and risk disrupting investment and global value chains. According to our latest Interim Economic Outlook, prospects are now weaker in nearly all G20 countries, with the global GDP growth projected to ease to 3.3% in 2019 and 3.4% in 2020, well below the rates seen in 2017 and 2018.
This challenging context is affecting the economic performance of many countries; Japan is not an exception.
Japan’s current economic expansion is now the longest in its post-war history, though not its fastest. We expect GDP to reach ¾ per cent this year and in 2020. The growth of output per capita has accelerated to a pace close to the OECD average and job creation has been robust. Persistent deflation has been replaced with positive, albeit low, inflation.
However, the uncertainty surrounding current trade tensions and the slower economic growth in China are having an adverse impact on Japan. They are taking their toll on business confidence, which is at its two-year low according to the latest “Tankan” (quarterly business survey).
Escalating downside risks make key structural reforms more important than ever. Japan has taken important steps, such as cutting corporate tax rates, increasing childcare capacity and expanding the scope for foreign workers.
Much more remains to be done to unlock Japan’s true potential and narrow its significant labour productivity gap with leading OECD countries. The Survey stresses the importance of strengthening corporate governance to enhance the dynamism of the corporate sector and policies to narrow the widening productivity gap between large companies and SMEs. More importantly, all these measures have to be consistent to building more inclusive economies, that help us reconnect with people and regain trust in our institutions.
In this complex moment for the global economy, Japan has taken over the G20 Presidency. This is particularly important as the G20 has a credible track record in boosting collective efforts to address global challenges. But we must also address the shortcomings of global integration in terms of inclusiveness and act accordingly. We must place people at the centre of our policies.
Japan has defined a number of critical priorities in this Presidency, which focus on realising, in the words of Prime Minister Abe: “a free and open, inclusive and sustainable, human-centred future society”. Specific areas of focus include: promoting quality infrastructure; accompanying an ageing society; fostering the digital economy; promoting climate sustainability; addressing global economic risks; and, empowering women.
Moreover, as you very aptly recognise in the B20 Tokyo communiqué “Society 5.0 for SDGs”, businesses of all sizes and across all sectors have a critical role to play in realising these goals and achieving sustainable and inclusive development. We were glad to contribute to this debate, and to agree that businesses have an incredible role to play to build societies that are more inclusive.
Actually, I also want to invite Keidanren to help us identify firms that can join the “Business for Inclusive Growth” (B4IG) Initiative. The B4IG gathers exemplary firms all over the world with the goal to reduce the increased inequalities of income and opportunities in our societies, and to go beyond traditional profit maximisation.
The OECD has supported many of these efforts and continues to pave the way forward in our collaboration with the G20. Let me highlight some examples.
The G20, with the OECD’s support, has already helped to identify over 95 billion euros in additional tax revenues through the Automatic Exchange of Information (AEOI) mechanism. In addition, within the G20/OECD Inclusive Framework process, we are currently working to agree on a roadmap for reaching a long-term solution to ensure that our tax systems are fair and fit for the digital economy. I look forward to updating G20 Finance Ministers in Fukuoka on this.
The Global Forum on Steel Excess Capacity, which the OECD facilitates, provides an opportunity to send out a clear message on the G20’s ability to co-operate in reducing trade tensions and keeping the global recovery on track.
We are also supporting the WTO in its e-commerce negotiations by defining and analysing what is new or not in digital trade.
In the area of AI, reinforcing trust and security in cyberspace is an urgent necessity. Which is why the OECD has developed a set of principles to facilitate innovation, adoption of and trust in, AI. To ensure consistency and complementarity, we hope that these Principles will support the G20 in developing a co-ordinated response to international co-operation for trustworthy AI.
Focusing on the Japanese Presidency, the OECD is providing its full support for Prime Minister Abe’s “Osaka Track” initiative on data governance. We are building on our work to unlock the potential of data-driven discoveries and solutions, while paying close attention to the legitimate concerns of citizens regarding their privacy and security.
We are also supporting the Japanese Presidency in developing co-ordinated responses to longer-term trends including demographic change, as it will concern all G20 countries in the long-run. We are providing analysis on macroeconomic and financial inclusion implications as well as on the labour market situation for older people.
Ladies and Gentlemen,
Let me conclude by thanking BIAC Japan, in particular, Sakurada-san for your support and insights. By connecting the OECD with the corporate world, BIAC Japan provides an important in-house reality check on the OECD’s policy discussions.
I look forward to continuing our discussion in the annual B20-OECD-BIAC Special Session on 23 May to be held at the OECD after our Ministerial Council Meeting. Thank you.