Our World an Innovative Edge on Global Challenges

  • Prime Minister SHinzO ABe
  • Published 2016

Abstract

estern ind u s t r i a l country leaders meet in Japan on May 26-27, with worries about the global economic slowdown, market jitters and how to deal with another financial crisis at the top of their agenda. Guiding the Group of Seven (G7) discussions on how to recalibrate the international financial system will be Japanese Prime Minister Shinzo Abe, the architect of Abenomics, the name given to his administration’s attempts to shake Japan free of decades of economic stagnation. While opinions differ on whether Mr. Abe’s efforts to reform and revive the country are running out of steam, few would deny that his policies have pushed the country in a new direction. And whether the G7’s presidents and prime ministers, guided by Mr. Abe, can agree on strategies to steer the global economy safely through current financial and geopolitical uncertainties, remains to be seen. In mid-April, the International Monetary Fund (IMF) sounded warning bells about shaky economic conditions, falling commodity prices, concerns about China’s economy and the negative impact all of this has had on markets. This year, global equities had plummeted, volatility had risen sharply, talk of recession in advanced economies had increased and bank equity prices had come under renewed pressure, it noted. While the situation has improved recently, “these developments reflected increased concerns about the ability of policies to offset the impact of higher economic and political risks,” the IMF commented. They attributed the improvement in the market situation since February to better news on the economic front, as well as intensified policy actions by the European Central Bank, and a more cautious stance toward raising rates by the U.S. Federal Reserve. China has also stepped up efforts to strengthen its policy framework to bolster growth and stabilize the exchange rate. That said, policymakers “need to deliver additional measures to create a more balanced and potent mix of policies to reduce risks and support growth. If not, market turmoil could recur and intensify,” the IMF said. The Japanese government, as host of the G7 summit, which is being held at Ise-Shima in southern Japan’s Mie Prefecture, has held a string of preparatory ministerial meetings to work out just how far the industrialized countries are ready to change tack in dealing with these problems. The aim has been to have a nearcomplete summit communiqué to present to leaders when they begin their meeting, hopefully with only a few contentious phrases to resolve. The concern of those ministers is reflected in the wording of the first item listed on the seven-point summit agenda presented by Japan: “One of the major issues confronting the international community is growing uncertainty in the global economy, impacted by a range of factors including slowdowns in emerging markets, the sharp drop in oil prices and weakening trade. At the G7 Ise-Shima Summit, leaders will aim to deliver a positive message to address challenges to global economic growth and other risks,” the document said. Japanese business leaders are well aware another crisis could be just over the horizon. “There have been crises about every 10 years....we had in 1973 the oil crisis, in 1981 the Latin American debt crisis and Savings & Loan crisis, in 1987 it was Black Monday, around 1998 to early 2000’s, the Russian financial crisis and the .com bubble explosion, followed by the Lehman Brothers collapse in 2008,” says Yasuhiro Sato, President and CEO of Mizuho Financial Group, a major Japanese bank and securities company. “We have to carefully watch the global market and identify what are the weakest links and potential threats. It could be China, it could be Europe, it could be the U.S. Federal Reserve Bank’s interest rate increase,” says Mr. Sato. Also casting a shadow, and potentially deflecting the implementation of whatever the G7 decides to do is the outcome of presidential polls in the world’s largest economy, the United States in November. The G7’s other members are Germany, Japan, Britain, France, Italy and Canada. Additionally, the future of the U.K’s prime minister is unclear, should his country vote in a referendum due on June 23 to leave the European Union. IMF chief economist Maurice Obstfeld has said a British decision to leave the EU is a very real possibility, and that such a move would affect economic growth and cause “severe regional and global damage by disrupting established trading relationships.” Furthermore, scheduled elections could see new leaders, first in France and then in Germany next year. Mr. Abe’s mandate, though, runs through to 2018, although political commentators don’t rule out him calling a snap election later this year. “There are many problems and issues in the world we are facing and there are many things moving where we don’t know the outcome yet, such as the U.S. presidential election... we don’t know what will happen to the European leaders such as Angela) Merkel or David Cameron. What is certain is that there will be new leadership coming soon and to see how these new leaders tackle the global issues will be interesting,” says Hisashi Hieda, Chairman and Chief Executive of media, technology and tourism conglomerate Fuji Media Holdings. In April, the IMF predicted that growth in the world economy would slow to 3.2% this year, its second downwards revision in six months. Nevertheless, the IMF sees the pace of U.S. growth picking up slightly with its output rising by 2.4% this year, to around $19 trillion, the best result in the G7. By contrast, the number two economy globally, China, is exOur World

Cite this paper

@inproceedings{ABe2016OurWA, title={Our World an Innovative Edge on Global Challenges}, author={Prime Minister SHinzO ABe}, year={2016} }