BOJ Kuroda calls for
bolder reforms to meet G20 commitment
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[June 23, 2014]
By Leika Kihara
TOKYO (Reuters) - The
governor of the Bank of Japan called for bolder efforts
to raise the economy's potential as part of a G20 drive
to boost long-term global growth, keeping up pressure on
the prime minister to lay out a credible growth
"Coming up with growth strategies is a key challenge for Group of 20
members, so Japan must make further efforts on this," Haruhiko
Kuroda told a meeting of business executives on Monday.
Prime Minister Shinzo Abe's government has pledged to boost Japan's
potential growth to 2 percent from current levels of around 0.5
Kuroda described that goal as "ambitious but not impossible", if
efforts are made to deregulate the economy and encourage more women
and foreigners to enter a shrinking working population.
The comments came a day before Abe is set to deliver the latest
installment of his long-term growth strategies, which range from
corporate tax cuts and public pension reforms.
The so-called "third arrow" would follow the first two arrows of
aggressive monetary and fiscal stimulus that helped revive Japan's
economy, although analysts doubt how much of Abe's reforms will be
fulfilled enough to boost long-term growth.
OVERSEAS RISKS LOOM
Kuroda has been escalating calls for Abe to embark on bold reforms
as a rebound in domestic demand highlights supply constraints that
could curb long-term growth, such as a shortage of young workers in
a rapidly ageing population.
The governor, however, signalled that he will not use a lack of
progress in boosting Japan's potential growth as an excuse for not
achieving the central bank's inflation target.
"The bank's mission to ensure price stability remains unchanged
irrespective of the level of the potential growth rate," he said.
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The BOJ has kept policy steady since deploying an intense burst of
stimulus in April last year, when it pledged to double base money
via aggressive asset purchases to accelerate inflation to 2 percent
in roughly two years.
Kuroda said that while the economy was recovering moderately and
making steady progress in emerging from deflation, it was still
"half way through" meeting the BOJ's price target.
He also warned that a rebound in now-stagnant exports, fuelled by a
recovery in overseas growth, was key for Japan to achieve the
central bank's upbeat economic scenario.
"There remain various uncertainties regarding the outlook for
overseas economies, which all warrant vigilance," he said, pointing
to excess capacity weighing on Chinese economic growth, high
inflation plaguing some emerging economies and looming geo-political
(Editing by Chris Gallagher and Richard Borsuk)
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