• Tetsushi SONOBE, Dean, ADBI

Moderator: Jae Young LEE, Group Head and Lead Economist, AMRO

Lead Speakers:

• Sayuri SHIRAI, Professor of Economics, Keio University and Visit Fellow, ADBI
• Tohru SASAKI, Head of Japan Market Research, JP Morgan

Key issues for discussion:

As the COVID-19 pandemic gradually becoming an endemic, the Japanese economy continued to recover moderately in the first half of 2022. However, the economy still faces several mounting headwinds. Soaring energy prices led to escalated imported inflation and widening trade deficits. Amid the diverging monetary policy stances between the U.S. Fed and the BOJ, the yen has sharply depreciated against the U.S. dollar above 145-level, triggering a FX intervention by Japan to support the yen. Against this background, this session is to discuss the following short-term macroeconomic issues:

• What are the growth prospects of Japan for the rest of 2022 and 2023? Will the rising CPI inflation continue, and help change firms’ price- and wage-setting behaviors?
• What will be the key downside and upside risks to Japan’s short-term economic outlook? In particular, how severe is the risk of sharp yen depreciation, and what are the impacts of yen depreciation to the economy? Is yen depreciation good or bad to the economy?
• Does the BOJ’s current monetary policy stance remain appropriate? Has the yield curve control policy been effective in raising inflation? How would you assess scarring effects of “low-for-long” easy monetary policy in the economy?
• Should the BOJ start considering the exit from the current ultra-easy monetary policy, including the yield curve control? Which aspects should be the most taken into consideration

Moderator: Peter MORGAN, Senior Consulting Economist and Advisor to the Dean, ADBI

Lead Speakers:

• Motohiro SATO, Professor, Hitotsubashi University
• Naoko UEDA, Deputy Director of the Development Centre, OECD

Key issues for discussion:

Japan faces several medium- and long-term challenges, such as weakened fiscal discipline and the highest public debt level among peers, side effects from prolonged monetary easing, declining profitability of regional banks, and demographic drag from population aging and low fertility rates.

• The size of the Japanese government’s debt has picked up further with massive stimulus during the COVID-19 pandemic. What are the side-effects of such a high-level public debt on the economy and macro policies? Is the high debt stock sustainable in the long term?
• Post-pandemic public debt management policy became even more critical. In anticipation of the continued expansion in fiscal spending to support social security spending, what are the most feasible policy options to raise fiscal revenues, contain fiscal expenditures and restore fiscal soundness?
• What are key policies that can boost labor supply, capital accumulation and total factor productivity in order to raise the long-term potential growth rate of the Japanese economy?
• In this regard, how would you assess key pillars of the government’s structural reform policy, particularly, the New Form of Capitalism?

Hoe Ee KHOR, Chief Economist, AMRO