Sayuri Shirai: Recent global economic developments and monetary
policy in Japan - strengthening Japan's growth momentum through
opportunities in emerging Asia
Speech by Ms Sayuri Shirai, Member of the Policy Board of the Bank of Japan, at a meeting
with business leaders, Akita, 10 May 2012.
* * *
I. Introduction
Good morning, everyone. My name is Sayuri Shirai, and I am a Policy Board member of the
Bank of Japan. I am delighted to be speaking to you today, representing as you do the
administrative, economic, and financial communities in Akita Prefecture. And as well, I feel
deeply honored to be able to exchange views with you about performance and other issues
related to Japanese and overseas economies, particularly with regard to the developments in
this region.
First, let me briefly outline the content of my presentation. I would like to begin by
summarizing recent economic and price developments. These are described in great detail in
the Bank's Outlook for Economic Activity and Prices, which was published last month and
which I will refer to as the Outlook Report. In this first part of my presentation, I also wish to
discuss matters regarding Japan's monetary policy and related developments. Following
that, I aim to shed light on recent economic and financial developments in emerging
economies, particularly in Asia - "emerging Asia." This is because I believe that this region
could provide Japanese firms with an opportunity to increase the demand for their products
and services. At the same time, emerging Asia has the potential to revitalize the Japanese
economy, if economic relations between Japan and this region could be enhanced - not only
in terms of trade and tourism, but also through cross-border financial movements.
II. Recent developments in economic activity, prices, and Japan's monetary
policy
A. International financial markets and overseas economies
As we are all aware, strains in global financial markets intensified last summer, mainly owing
to concerns about the European debt problem. However, since then the strains have eased
somewhat, thanks to the following factors: (1) large-scale longer-term refinancing operations
(LTROs) with a maturity of 36 months conducted by the European Central Bank (ECB);
(2) coordinated action undertaken by the six central banks, including the Bank of Japan, to
lower the pricing on existing temporary U.S. dollar liquidity swap arrangements by 50 basis
points; and (3) achievement of orderly public debt restructuring between the Greek
government and private creditors - and the subsequent second-round financial assistance
from the European Union (EU) and the International Monetary Fund (IMF).
Under such improved circumstances, risk aversion among global investors has weakened
compared with the second half of 2011, and positive market developments have been
observed, including a pick-up in stock prices around the world. In the foreign exchange
market, the yen has depreciated somewhat against both the U.S. dollar and the euro
compared with around the end of 2011. Nonetheless, we should continue to monitor
developments in international financial markets, including foreign exchange markets, since
there still remains a high degree of uncertainty related to market conditions.
With regard to overseas economies, the pace of growth began to slacken in spring 2011. In
recent months, however, some positive developments have been observed. The U.S.
economy continues to recover at a moderate pace. The sluggishness in the European
economy remains strong mainly due to the effects of fiscal austerity measures. More
recently, however, the economy generally stopped deteriorating further as financial markets
have regained some stability. In the case of emerging and commodity-exporting economies,
the relatively high growth has on the whole been maintained since domestic demand has
been solid, and exports to advanced economies appear to have recovered.
B. Developments in economic activity and prices in Japan: present conditions
and outlook
We all recall how the Great East Japan Earthquake undermined the Japanese economy and
caused serious damage to supply chains in the manufacturing sector. With the restoration of
supply chains, Japan's economic activity picked up steadily, though that recovery lasted only
until autumn 2011. From the second half of fiscal 2011, economic activity remained more or
less flat mainly due to an adverse effect on exports and production of the slowdown in
overseas economies and the appreciation of the yen. More recently, however, it has become
increasingly evident that the economy is shifting toward a pick-up phase, although economic
activity has remained more or less flat (Chart 1).
As for the outlook, the Japanese economy is expected to return to a moderate recovery path
in the first half of fiscal 2012. This is a likely scenario, since the pace of recovery in overseas
economies should pick up - led largely by the emerging and commodity-exporting
economies - and reconstruction-related domestic demand after the Great East Japan
Earthquake should gradually strengthen. In fiscal 2013, the economy is expected to continue
to grow at a pace above its potential, as overseas economies continue to achieve relatively
high growth. However, the economic growth rate is expected to be somewhat lower than that
in fiscal 2012 because the positive effects from reconstruction-related domestic demand are
likely to gradually diminish (Chart 2).
With regard to prices, developments in the consumer price index (CPI; for all items less fresh
food) indicate that after reaching a historical trough of 2.4 percent in August 2009, the
yearon-year rate of decline has continued to slow consistently since around the end of 2009. In
recent months, that rate of change has been at around 0 percent. In terms of the outlook for
prices, the rate of change will remain in positive territory and show a gradual increase as the
aggregate supply and demand balance is expected to continue improving with the moderate
recovery. International commodity prices are likely to follow a moderate rising trend owing to
an expected increase in demand for food and energy in line with the growth in emerging
economies. Assuming that medium- to long-term inflation expectations remain stable, the
rate of change in the CPI is projected to gradually rise to a range of above 0.5 percent and
less than 1 percent toward the second half of fiscal 2013. Thereafter, it will likely be not too
long before the rate reaches the Bank's "price stability goal in the medium to long term" of
1 percent for the time being, as specified in the Bank's statement released in February
(Chart 2).
Comparing the current projection for real GDP growth rates with that in the January 2012
interim assessment, the rate of growth for fiscal 2012 is likely to be higher than initially
assessed. This reflects an improvement in the financial markets driven by the reduced tail
risk associated with the European sovereign debt crisis. Comparing the current CPI
projection with that in the January 2012 interim assessment, the rates of change for fiscal
2012 and 2013 are also likely to be somewhat higher than originally assessed. This is partly
because the upwardly revised economic projection is expected to improve the aggregate
supply and demand balance. The correction of the sharp appreciation of the yen and a rise in
crude oil prices also contributed to the upward revision in the CPI projection.
C. Upside and downside risks
The aforementioned outlook is the scenario the Bank considers to be the most likely - in
other words, its baseline scenario. As described in detail in the Outlook Report, the following
four major risks concerning the outlook for economic activity warrant attention: (1) uncertainty
related to developments in overseas economies; (2) uncertainty with regard to
reconstruction-related domestic demand; (3) uncertainty associated with firms' and
households' medium- to long-term growth expectations; and (4) issues related to Japan's
fiscal sustainability.
Among developments in overseas economies, various challenges remain in Europe. Though
the tail risk of global financial market turmoil causing a significant global economic downturn
has decreased, the fundamental cause of such a risk has not been resolved. There is a
possibility that strains in global financial markets will once again intensify if concerns
reemerge about implementing fiscal and structural reforms, especially in the peripheral
European countries. If such strains reemerge, they are likely to act as a downside risk to the
global economy - and thus to the Japanese economy. Moreover, given that there is a high
degree of uncertainty surrounding the progress in households' balance-sheet adjustments,
the prospects for the U.S. economy also present some downside risk. It is possible that the
pace of its economic recovery will remain more moderate than expected.
Regarding risks associated with prices, there are mainly two types. The first risk concerns
developments in firms' and households' medium- to long-term inflation expectations; the
second risk relates to developments in import prices. With this second risk, there is a
possibility that crude oil prices will surge mainly reflecting geopolitical risk. If that does occur,
there will be a deterioration in Japan's terms of trade, which will squeeze firms' profits and
reduce households' purchasing power, ultimately having an adverse effect on the whole
Japanese economy.
D. Conduct of monetary policy
The Bank is naturally concerned about the long-term prevalence of deflation in the Japanese
economy. To help the economy overcome deflation, comprehensive monetary easing was
introduced in 2010 by establishing the Asset Purchase Program. Subsequently, monetary
easing has gradually been enhanced through expansion of the Program.
On February 14 of this year, the Bank introduced "the price stability goal in the medium to
long term," which is defined as the inflation rate consistent with price stability sustainable
over the medium to long term. The purpose of this action was to promote public
understanding of the Bank's determination to overcome deflation. It was decided that the
goal would be "within a positive range of 2 percent or lower in terms of the year-on-year rate
of change in the CPI," and the goal was set at 1 percent for the time being. Moreover, the
Bank made it clear that it would continue pursuing powerful monetary easing - through its
virtually zero interest rate policy and continued implementation of the Program - until it
judged the 1 percent goal to be in sight, on condition that it identified no significant risk to the
sustainability of economic growth, including from the accumulation of financial imbalances. At
the same time, the total size of the Program was raised by 10 trillion yen, from about
55 trillion yen to about 65 trillion yen (Chart 3).
On April 27, the Bank decided to increase the total size of the Program further by about
5 trillion yen, from about 65 trillion yen to about 70 trillion yen with the following changes in its
composition. First, the purchase of Japanese government bonds (JGBs) was increased by
about 10 trillion yen. Second, the purchases of exchange-traded funds (ETFs) and Japan
real estate investment trusts (J-REITs) were raised by about 200 billion yen and 10 billion
yen, respectively. Third, the maximum outstanding amount of the Bank's fixed-rate
fundssupplying operation against pooled collateral with a six-month term was reduced by about
5 trillion yen, taking into account the recent episodes of undersubscription. And fourth, the
remaining maturity of JGBs to be purchased under the Program was extended from "one to
two years" to "one to three years." The same treatment was applied to the remaining maturity
of corporate bonds to be purchased under the Program. In addition, it was decided that the
schedule for increasing the outstanding amount of the Program to about 65 trillion yen by
around the end of 2012 would be maintained. It was further decided to increase the
outstanding amount of the Program to about 70 trillion yen by around the end of June 2013.
Now, given that the outlook for the performance of economic activity and prices has not been
adjusted downward compared with the January 2012 interim assessment, some may argue
that the timing of the Bank's action at this time was questionable. On this point, I would like to
stress that there remains a high degree of uncertainty surrounding the assessment, as
already explained. The positive signs in economic and price developments that have
emerged in recent months do not necessarily imply that the baseline scenario will be realized
as projected. Even though the scenario may eventually materialize, it is still not certain how
soon it may do so. Considering recent episodes, for example, there were some cases where
the baseline scenario was not fulfilled, even though the economy appeared to be on the track
of sustainable economic growth and prices also initially appeared to be rising steadily.
Therefore, the Bank decided to seize this occasion and further enhance monetary easing to
better ensure the return of the Japanese economy to sustainable growth with price stability. I
believe this action also demonstrates the Bank's determination to implement its monetary
policy commitment, as explained earlier.
In order to overcome deflation, however, it is important to stress the need to address Japan's
long-term structural challenge of declining trend growth rates amid rapid population aging. To
meet this challenge and establish a new basis for economic growth, firms need to become
more innovative and competitive in an effort to add value to their activities and explore new
sources of demand both at home and abroad. The government also needs to support the
business community by creating a more business-friendly environment. Financial institutions
should make further efforts to strengthen the foundations for economic growth by giving
financial support to innovative and viable firms and providing new types of financial and other
services, which are increasingly being demanded.
Meanwhile, the Bank's accommodative monetary policy will certainly support such
privatesector activities through a steady decline in the cost of raising capital. By promoting
longerterm economic growth, the Bank has supported the business community indirectly: it
introduced the fund-provisioning measure to support strengthening the foundations for
economic growth (the Growth-Supporting Funding Facility) in 2010, and it has provided
longer-term fixed-rate funds to financial institutions. This facility was expanded in March and
April of this year (Chart 4). It should be emphasized that the goal of overcoming deflation will
be achieved through such continuous, comprehensive efforts by firms, financial institutions,
the government, and the Bank within their respective roles.
III. Changing economic features of advanced and emerging economies
As already mentioned, I believe that overcoming deflation in Japan requires policies and
private-sector initiatives to promote economic growth in addition to the Bank's
accommodative monetary policy. In line with this view, I would like to explain the importance
of emerging economies as a potential source for generating economic growth in the
Japanese economy.
A. Growing presence of emerging economies
The Japanese economy has confronted a series of large-scale shocks in recent years.
Among them, the global financial crisis of 2008-09 presented the greatest shock to both the
global and Japanese economies, causing a rapid shrinking in production and trade around
the world. In response, it was agreed at the G20 Summit that coordinated policy actions
would be conducted to quickly stabilize financial markets and prevent the global recession
from deepening further. Thus, central banks and governments collectively reacted to the
crisis with liquidity injections into the financial sector, bailouts, and fiscal stimulus packages.
Since these accommodative policies helped stimulate both domestic and overseas demand,
the global economy succeeded in avoiding a deep recession like that of the Great
Depression in the 1930s, and the average rate of global growth dropped by only 0.7 percent
in 2009.
What has become evident after the global financial crisis is that the overall economic
performance of emerging economies has been better than that of advanced economies.
Advanced economies were formerly viewed by emerging economies as role models. They
were highly respected and deemed worthy of emulation, because advanced economies had
already achieved a higher level of living standards and produced numerous firms with
advanced skills, management styles, and knowledge. Their macroeconomic performance
also used to be regarded as relatively stable, as exemplified by low, stable inflation and
sound government fiscal positions. Advanced economies were also equipped with
welldeveloped legal and judiciary systems and mature democratic societies. Most of these
features are unchanged today, but there is a growing view among emerging economies that
the path toward economic and social development need not be the one adopted by
advanced economies: alternative approaches can be explored according to a particular
country's conditions and history.
B. Features of emerging economies
I would now like to highlight four features that have developed in emerging economies since
the occurrence of the global financial crisis.
B-1. Impressive growth-generating power
The economic size of emerging economies is rapidly expanding. As a result, they are
increasingly functioning as an engine of global growth. Based on IMF data, for example, the
purchasing power parity (PPP)-adjusted share of global GDP of advanced economies
dropped from a high level of 63 percent in 2000 to 51 percent in 2011. By contrast, that of
emerging economies rose from 37 percent to 49 percent over the same period (Chart 5).
China stands out among the emerging economies. It has exhibited an impressive
performance, having doubled its share of the global GDP from 7 percent in 2000 to
14 percent in 2011. India follows China, with its global GDP share having jumped from
3.7 percent to 5.7 percent over the same period. Brazil ranks third in terms of economic size
after China and India, but its global GDP share was unchanged at around 3 percent over that
period. Thus, it can be stated that emerging Asia has made more impressive progress than
emerging economies in other regions.
The rapid growth of emerging economies implies that their growth-generating power is
greater than that of advanced economies. This can be grasped by considering historical
movements in real GDP growth rates. Here, the period of 2000-11 will be divided into two
sub-periods - before and after the 2007 global financial crisis - namely, 2000-07 and
2007-11. It is evident that the difference in average growth rates between emerging and
advanced economies increased from 3.9 percent in 2000-07 to 5.3 percent in 2008-11.1
This growing gap is mainly attributable to the decline in the average growth rate of advanced
economies. Their average rate of growth almost reached minus 4 percent in 2009; though
their subsequent growth became positive, it has remained modest (Chart 6). In Japan, the
average growth rate in the pre-crisis period reached 1.5 percent, but it dropped to minus
1 percent following the crisis. In particular, its economic activity plunged by 5.5 percent in
2009. Japan managed to achieve a 4.4 percent growth rate the following year, but the
country then suffered further blows in 2011: the Great East Japan Earthquake and flooding in
Thailand caused serious damage to supply chains in the manufacturing sector mainly
through a sharp curtailment of production and exports. In the United States, the average
growth rate dropped from 2.6 percent in the pre-crisis period to 0.2 percent following the
crisis. The U.S. economy experienced its sharpest decline of 3.5 percent in 2009, though it
has since displayed modest but positive growth.
B-2. Favorable fiscal performance
Emerging economies enjoy a relatively favorable fiscal position, and in sharp contrast to
advanced economies they have continued to show an improvement in this regard. This may
indicate not only that the likelihood of succumbing to a sovereign debt crisis in the near future
has declined for emerging economies, but also that they have some room to adopt an
accommodative fiscal policy in the downturn phase of the economic cycle. According to IMF
data, the fiscal deficit as a share of GDP jumped from 1.5 percent in 2001 to 6.5 percent in
2011 among advanced economies; among emerging economies, however, this deficit was
reduced from around 2.8 percent to under 2 percent over the same period (Chart 7).
Similarly, the public debt-to-GDP ratio for advanced economies rose from 73 percent in 2000
to 104 percent in 2011, but emerging economies managed to reduce the size of this ratio
from 49 percent to 36 percent over the same period (Chart 8).
Above all, China's fiscal position has remained relatively solid: its fiscal deficit-to-GDP ratio
dropped from 3.3 percent in 2000 to 1.2 percent in 2011, and its public debt-to-GDP ratio
rose from only 16 percent to 26 percent over the same period.2 Despite its prolonged fiscal
deficit performance, India also managed to reduce its deficit ratio from 10 percent in 2000 to
8.7 percent in 2011; it decreased its public debt ratio from 72 percent to 68 percent over the
same period.3 By contrast, Japan's fiscal position deteriorated: its deficit ratio grew from
around 7.5-8.0 percent in 2000 to 10 percent in 2011, and its public debt ratio increased
from 140 percent to 230 percent over the same period. This debt figure is the largest among
advanced economies.
B-3. Rising capital inflows from the rest of the world
From a consideration of cross-border capital flows, it is notable that private-sector capital
flows to advanced countries in the EU have dropped, while those to emerging Asia and Latin
America have grown (Chart 9). Private-sector capital inflows consist largely of foreign direct
investment (FDI), portfolio investment, and such other forms as loans and deposits.
Privatesector capital inflows to emerging economies are concentrated in portfolio investment,
followed by FDI. In recent years, there has in addition been an increase in capital inflows in
terms of other items.
Asian emerging economies face a more rapid pace of capital inflows than emerging
economies of other regions. From 2000 to 2011, the amount of capital inflows to emerging
Asia showed an 8.8-fold expansion. This growth is greater than that for emerging Latin
American economies, whose capital inflows showed only a 4.6-fold increase over the same
period. As a result, capital inflows to emerging Asia as a share of total capital inflows to
emerging economies rose impressively from 32 percent in 2000-02 to 48 percent in 2011.
Latin America lost its leading position in terms of total capital inflows, with its share dropping
from 37 percent to 29 percent over the same period.
An increase in capital flows to emerging economies indicates that these economies are
becoming important capital importers. This trend can be attributed to their continued high
economic growth, as well as the presence of a large number of potential investment projects
and high demand for credit, which reflects the development stage of their economies. This
explanation is supported by the fact that returns on investments to emerging economies have
been higher than those on investments to advanced economies (Chart 10).
B-4. Gradually evolving external investment activities
While it is true that emerging economies are major importers of private-sector capital inflows
from around the world, one feature is becoming increasingly evident in emerging Asia: once
figures on overseas investment by the monetary authorities and government are added to
cross-border capital flow data, it is seen that these economies are also becoming important
capital exporters. This suggests that the amount of capital outflows exceeds that of capital
inflows in emerging Asia, thereby transforming it into a net capital exporter.
In the past, advanced economies played the role of net capital exporters as a result of
abundant capital and relatively limited domestic demand for credit. By the middle of the
2000s, however, this situation had changed, as some emerging economies shifted from
being net capital importers to exporters. In particular, it is remarkable to note that China has
become the largest net capital exporter in the world, followed by Japan and Germany. In
other words, China - even though its per capita income is below 8,000 U.S. dollars and thus
its income level is regarded as medium - exports more capital than Japan and Germany,
whose per capita income of over 30,000 U.S. dollars marks their status as high-income
nations. In addition, China is becoming a major financier of advanced economies, such as
the United States. In Asia, many economies - including Hong Kong, Indonesia, Malaysia,
Singapore, the Philippines, and Thailand - have, like China, also become net capital
exporters.
IV. Strengthening Japan's growth momentum through growth opportunities in
emerging Asia
A. Deepened economic relations between Japan and emerging Asia
I have pointed out that emerging Asia has many favorable features relative to advanced
economies. I would now like to emphasize how Japan has already begun deepening its
economic relations with these economies. Indeed, Japan's trade value with emerging Asia
exceeds that with the United States and Europe. Specifically, China has become Japan's top
trade partner. At the same time, Japan's trade relations with the Association of Southeast
Asian Nations (ASEAN) and South Korea have been rapidly developing. I would like to stress
that emerging Asia is not only important to Japan as a trade partner, but also is becoming
essential as a tourism partner. According to data released by the World Tourism
Organization (UNWTO), Germany, the United States, and China are among the countries
with a large overseas tourism expenditure. These days, Chinese tourists are commonly
encountered in many places in Japan. There is no doubt that China is becoming one of the
most important importers of Japan's tourism services.
In addition to trade and tourism, cross-border capital flows have quickly expanded between
Japan and emerging Asia, especially in the form of FDI. Therefore, I would like to address
now the possibility of making use of rising growth opportunities in emerging Asia by
activating cross-border capital flows with a view to increasing trend growth rates and
revitalizing the Japanese economy. This presentation will proceed with the issue of FDI,
followed by portfolio investment and banking activities.
B. Expanding FDI flows between Japan and emerging Asia
With the growing number of middle- and high-income consumers, emerging economies have
experienced an increase in domestic demand, and thus the markets for goods and services
have expanded. Japanese firms have made efforts to provide such goods and services. They
are able to meet such demand if they modify their production capacity to satisfy the specific
needs and conditions that exist in various emerging economies by establishing locally based
production, marketing, and sales networks. In this regard, Japan's outward FDI has rapidly
expanded over recent years. Data released by the United Nations Conference on Trade and
Development (UNCTAD) indicate that Japan's outward FDI grew by 105 percent year on
year to 115.6 billion U.S. dollars in 2011.4
By region, FDI to emerging Asia grew by 63 percent year on year to 3 trillion yen in 2011
(Chart 11).5 In very recent years, Japan's outward FDI to the ASEAN countries - especially
to Thailand, Indonesia, and Vietnam - has exceeded that to China. Japan's FDI to Thailand
has been concentrated in the areas of electrical machinery, general machinery, and iron and
nonferrous metals. After the severe flooding in Thailand at the end of last year damaged
production facilities in a number of Japanese-operated industrial zones, Japanese firms have
boosted FDI into Thailand to restore their production and export capacity. Japan's FDI to
Indonesia has been increasing in the transportation machinery sector thanks to Indonesia's
rapidly growing demand for automobiles. In the case of Vietnam, where labor costs are lower
than in neighboring emerging economies, Japan's FDI has undergone expansion in the
electrical machinery sector. Regarding China, Japan's FDI has traditionally centered on the
manufacturing sector; however, recently it has grown in the wholesale and retail sectors, as
well as the real estate sector, mainly in provincial cities in the process of urbanization. In
India, Japan's FDI has not undergone a rapid increase despite strong interest on the part of
Japanese firms; this is because the slow administrative approval process for investment
projects and a shortage of industrial sites are believed to act as obstacles.
In addition to Japan's outward FDI, it is equally important to examine its inward FDI with a
view to making use of rising growth opportunities in emerging Asia. Inflows of FDI to Japan
may provide the opportunity to promote innovation and thus revitalize the domestic economy.
The level of Japan's inward FDI from emerging Asia has been positive over the past five
years, although the value declined moderately in 2011 compared to the previous year
(Chart 12). Singapore, whose FDI is concentrated in the construction sector, is the largest
supplier of FDI to Japan. In addition, FDI from South Korea has maintained positive growth
rates since 2005. Investment from Hong Kong and China to Japan has also remained solid.
A major Japanese electronics producer sold some of its electrical appliance operations to a
large Chinese electronics firm this year. Last year, a Chinese computer manufacturer formed
a personal computer joint venture with a Japanese computer-manufacturing firm.
Such moves may reflect cross-border M&A activities in the face of tougher global competition
and the need to promote corporate restructuring and reorganization. FDI inflows to Japan
have also been witnessed in the area of medical and welfare services - where the potential
demand is high due to the rapidly aging society - as well as in energy-saving and
environment-friendly businesses. Nonetheless, the scale of Japan's inward FDI remains
roughly one-tenth of its outward FDI to emerging Asia. Since firms in emerging Asia are
swiftly growing and becoming multinational, it is likely that the scale of inward FDI to Japan
will expand.
C. Gradually expanding portfolio investment between Japan and emerging Asia
I would now like to examine recent trends in cross-border portfolio investment. At one time,
the securities market in emerging Asia was underdeveloped, and the banking sector
dominated the financial system. This situation has changed in recent years with the rapid
growth of the securities market.
Regarding bond markets, it used to be the case that Asian economies had difficulty in issuing
domestic currency-denominated bonds internationally, because foreign investors did not
want to bear exchange rate risks and thus preferred U.S. dollar-denominated assets. This
prevented the market from developing. However, as their macroeconomic performance has
stabilized and become more favorable, and their governments have begun to liberalize their
financial markets, emerging economies have become increasingly capable of issuing bonds
denominated in both foreign and domestic currencies. If East Asia, including Japan,
collectively makes further progress in terms of improving each economy's financial
infrastructure - for example, in clearing and settlement institutions and securities depository
institutions - as well as standardizing securities regulations, cross-border investment is likely
to prosper.
With regard to the stock market, the number of listed firms is rapidly increasing in emerging
Asia. As a result, the number of initial public offering (IPO)-related listed firms currently
accounts for over half of the world total. In addition, the share of stock market capitalization
in East Asia and the Pacific region now accounts for over 30 percent of the world total.
The development of securities markets in emerging Asia provides a revenue-enhancing
opportunity for Japanese investors. But as well, Asia's growing savings could be utilized on a
global scale for a wide range of firms, including those of Japan. Given that