Remarks by Angel Gurría, OECD Secretary-General, delivered at a reception with Friends of the OECD
24 April 2013, Tokyo
(As prepared for delivery)
Ambassador Taniguchi, Ambassador Kitajima,Sugimoto-san, Honda-san, Saito-san,Koga-san, Utsumi-san, Friends of Tohoku School,
Dear Friends ,
Thank you all for the warm welcome. To echo Prime Minister Abe’s words, “I am back!” and it is a pleasure to be here and to have the opportunity to personally express my gratitude for your continued support and cooperation with the OECD.
I came to Tokyo to launch the latest Economic Survey of Japan, which we released yesterday. In this new report, we see several positive signs. This is good news. Particularly in light of the persistent global economic crisis and considering the very big challenges that Japan has faced in recent years.
The new government’s resolve to revitalise the economy through a three-pronged strategy, combining bold monetary policy, flexible fiscal policy and a growth strategy is most encouraging. In 2013 and 2014, output is projected to grow by around 1.5%, despite the waning contribution from public reconstruction spending and the expected fiscal consolidation effort. Part of this growth may be driven by recovering exports in the context of a projected pick-up in world trade combined with the depreciation of the yen against the dollar since mid- November. This can also boost business investment and employment. As a matter of fact, Japanese employment already increased in the second half of 2012.
These and other improvements can be attributed to the new, strong leadership in Japan. The Prime Minister’s “Abenomics” is building a good basis for growth. This is complemented by the commitment of Ministers, Parliamentarians and business leaders, many of whom I have met this week.
But we know that Japan is still facing several key challenges.
We know that reversing the rise in the debt-to-GDP ratio is crucial, as this continues to be a source of risk and uncertainty, at over 200% of GDP, the highest level in the OECD area. With a large budget deficit of about 10% of GDP, this debt ratio will continue climbing into unchartered territory. Japan can implement a number of measures to reverse this trend, like controlling expenditures for social security, in light of its rapidly ageing population.
Ending 15 years of deflation is also a priority. We welcome the Bank of Japan’s new commitment to achieve a 2% inflation target through quantitative and qualitative monetary easing. We recommend maintaining an expansionary policy stance until this target is reached. This will help to end the deflationary disease that has hampered growth and economic vitality.
Japan has been facing these issues for many years. It is increasingly clear that in order to address these very complex issues, Japan needs to forge a collective response. It is vital for its leaders to work hand in hand with all key stakeholders, like the Council on Industrial Competitiveness, and the Council on Regulatory Reform, which I also met with this week.
Through open discussions and input from all stakeholders, we can create the most effective policy advice and put the best foot forward for Japan. The Economic Survey shows that this process is underway, and is producing tangible results.
And when I talk of a collective response, I also think of the international community. In this highly interdependent world, no country can address its problems in isolation. Japan knows this well. It’s very active participation in the OECD proves it.
As we approach the 50th year of Japan’s membership in the OECD (next year), we stand ready to reinforce our cooperation with this resilient and important country n its reform efforts and in its constant search for better policies for better lives.
We very much look forward to that!