Structural reforms to take time, Japan’s bank chief tells Davos summit


Bank of Japan Gov. Haruhiko Kuroda told the World Economic Forum’s annual Davos meeting that it will take time before structural reforms in Japan begin to produce positive effects.

Since Prime Minister Shinzo Abe launched his “Abenomics” reflationary policy mix two years ago, the rate of female participation in Japan’s national workforce has risen to a record high, Kuroda said Saturday, although it remains far lower than in OECD member countries.

While noting that structural reforms are “very important in the long run” and have “significant impact on growth potential,” Kuroda said they “take time” to bear fruit.

“So I hope people are slightly more patient,” he told the gathering in the Swiss resort town.

On growing concerns about the global economy, Kuroda said such fears are “a bit exaggerated” and predicted that falling oil prices and the European Central Bank’s recent decision to start quantitative monetary easing will improve the global economic outlook.

The free-falling price of oil “could accelerate the global economic growth,” he said, while the ECB’s monetary decision is “certainly quite significant.”

Kuroda said he is not worried about further depreciation of the euro stemming from the ECB’s decision. Like Japan’s central bank, the ECB does not target exchange rates, he noted.

He said the launch of quantitative easing means the eurozone economy “could recover strongly” and deflationary pressure “could be eradicated,” adding that would be “great for the global economy.”

  • Richard Solomon

    As Kuroda was hand picked by Abe, he is reluctant to acknowledge that the so called third arrow of Abenomics hasn’t even left the quiver yet. Ie, it’s been all talk and very little, if any, action. Admittedly, Japan’s economic system is deeply entrenched in long standing practices and perspectives. The Finance Ministry seems to do the bidding of the large corporations rather than try to move the country towards more openness. Ie, it is more invested in sustaining the status quo, even when that has led to more than two decades of stagflation/deflation. As they say here in the USA, Abe will have ‘to play hardball’ if he really wants things to change. Ie, he is going to have to fire some bureaucrats and bring in some younger, outside people who are eager to change things. Admittedly, not easy to do in consensus driven Japan. But that is what is needed.

    • Oliver Mackie

      Did you know that actually there is no non-Western-derived word word in Japanese for “consensus”? Pause for thought when labeling Japan as “consensus driven.”