February 3, 2021
Bank of Japan
Japan's Economy and Monetary Policy
Speech at a Meeting with Local Leaders in Kanagawa
(via webcast)
WAKATABE Masazumi
Deputy Governor of the Bank of Japan
Introduction
Good morning. It is my pleasure to have the opportunity today to exchange views with
leaders in administrative, financial, and economic areas in Kanagawa Prefecture, which is
taking place online due to the continuing impact of the novel coronavirus (COVID-19). I
would like to take this chance to express my sincere gratitude for your cooperation with the
activities of the Bank of Japan's Yokohama Branch. Also, it is an honor to join this meeting,
as I was born in Yokohama and raised in Fujisawa.
Outlook for
At the January Monetary Policy Meeting (MPM), the Bank released the
Economic Activity and Prices
(Outlook Report) in which it presented the outlook for Japan's
economic activity and prices through fiscal 2022. Today, I will first talk about the Bank's
view on economic and financial developments at home and abroad by providing you an
overview of the Outlook Report, and then explain the future conduct of monetary policy
while touching on the thinking behind the upcoming assessment for further effective and
sustainable monetary easing. I also would like to describe economic developments in
Kanagawa Prefecture at the end of my speech.
I. Developments in Economic Activity and Prices
A. Developments in the Global Economy
The current crisis is characterized by significant uncertainties depending on the course of
COVID-19 and unevenness of its impact across industries and attributes.1
Let me start by looking at developments in the global economy. It has picked up from a
state of significant depression in the first half of 2020, although the impact of a resurgence
of COVID-19 has been seen in part (Chart 1). However, with the number of confirmed new
cases rising again in such places as the United States and Europe since last autumn,
downward pressure has been exerted on the overall economy, particularly in the face-to-face
services industry. This has been evident especially in Europe. That said, production activity
of the manufacturing industry and the trade volume have continued to recover, almost
returning to the pre-pandemic level. Business sentiment globally has remained on an
improving trend on the whole, although the pace of a pick-up is different between the
manufacturing industry and the services industry.
As for the outlook, the global economy is likely to continue improving, partly supported by
aggressive macroeconomic policies taken by each country and region. That said, it is
projected that the pace will be only moderate for the time being, partly due to the impact of
the resurgence of COVID-19, mainly in the United States and Europe. The International
World Economic Outlook Update
Monetary Fund (IMF) also projects in the latest (WEO)
that the global GDP will decline significantly in 2020 and recover in 2021 but to a level that
somewhat exceeds its 2019 level. In addition, we should pay attention to multilayered risks
in the global economy, including various ones related to geopolitics and climate change.
B. Developments in Japan's Economy
Next, I will talk about developments in Japan's economy. Although the economy has
remained in a severe situation due to the impact of COVID-19, it has picked up as a trend
from the bottom hit in the April-May period last year, when a wide range of economic
activities were constrained. The impact has been relatively small on production and
transactions of goods, whereas it has been large on face-to-face services. Such unevenness
is becoming much more evident recently. With these factors in mind, let me explain each
component in some detail.
Exports and production have continued to increase since goods transactions, including trade
activity, have picked up at a relatively rapid pace (Chart 2). Looking at real exports by
goods, exports of automobile-related goods have continued to increase clearly, reflecting the
materialization of pent-up demand, and an uptrend in IT-related exports has been evident.
Exports of capital goods have turned to an increase due to a global recovery in production
activity. As for the outlook, with the global economy continuing to improve, exports and
production are likely to increase for a wide range of goods, including capital goods and
IT-related goods.
Business fixed investment has stopped declining on the whole, albeit with variations across
industries (Chart 3). Machinery investment, which had continued to decline, has picked up
recently, reflecting increases in exports and production. On the other hand, construction
investment has remained on a moderate declining trend due to a decrease in construction of
stores and accommodation facilities by the face-to-face services industry. According to the
Tankan
business fixed investment plans in the December 2020 (Short-Term Economic
Survey of Enterprises in Japan) released by the Bank, the year-on-year rate of change in
business fixed investment for fiscal 2020 is minus 2.4 percent. Although it should be noted
that the plan for this fiscal year has been gradually revised downward, the rate is negative
only to a small degree when compared with that of the decline in economic activity. This
seems to be largely attributable to the fact that large-scale adjustments in business fixed
investment have been avoided due to accommodative financial conditions. An analysis by
the Bank's staff suggests that financial institutions' lending attitudes that have remained
accommodative in the current phase will have an effect of pushing up the overall amount of
business fixed investment to a fair degree, mainly led by small and medium-sized firms.2
As for the outlook, business fixed investment is likely to pick up for the time being, led by
machinery investment, and then increase further, supported by accommodative financial
conditions, the government's economic measures, and improvement in corporate profits.
Private consumption has picked up gradually as a trend, but downward pressure has
increased recently on consumption of face-to-face services, such as eating and drinking as
well as accommodations (Chart 4). The Consumption Activity Index (CAI) shows that
goods consumption has continued to pick up on the whole, whereas improvement in
services consumption has leveled off due to the resurgence of COVID-19. As the state of
emergency has been reinstated for 11 prefectures, including Kanagawa Prefecture, private
consumption, particularly in face-to-face services, is likely to remain under strong
downward pressure for the time being. It is necessary to pay attention to future
developments in the face-to-face services industry and their impact on the employment
situation since the proportion of small firms and non-regular employees is high in the
industry.
The employment and income situation, which shows the underlying developments in
private consumption, has remained weak (Chart 5). The year-on-year rate of change in the
number of employees has continued to register a negative figure, mainly due to a decrease
in non-regular employees. Total cash earnings per employee have declined, mainly due to a
decrease in non-scheduled cash earnings. Employee income therefore has declined.
However, the government's Employment Adjustment Subsidy, which had been expanded,
has somewhat halted job cuts. Bankruptcies of firms have been at low levels, mainly due to
the Bank's and the government's measures to support financing. Suspension and
discontinuation of businesses have not surged.3 Under these circumstances, the decline in
the number of employed persons has been constrained compared with a significant decline
in economic activity. Employment and income are projected to remain under downward
pressure for the time being but likely to turn to an improving trend thereafter, with domestic
and external demand recovering.
Let me sum up the outlook for Japan's economy (Chart 6). Downward pressure, reflecting
the resurgence of COVID-19, is likely to remain strong for the time being, particularly in
face-to-face services consumption. That said, although there are high uncertainties, the
Bank projects as a baseline scenario that Japan's economy thereafter will follow an
improving trend, albeit only moderately, supported by a recovery in external demand,
accommodative financial conditions, and the government's economic measures. In terms of
the medians of the Policy Board members' forecasts in the January 2021 Outlook Report,
3
The number of suspensions and discontinuations of businesses should be interpreted with some
latitude since there are several statistics with different survey subjects and methods, and there are
large fluctuations in the results. That is, according to the Statistics on Registration released by the
Ministry of Justice, which compiles the number of firms that discontinued their businesses through
registration procedure, the year-on-year rate of change is minus 3.2 percent for the
January-November period of 2020. Statistics compiled by the Teikoku Databank, which include the
number of firms that discontinued and suspended their businesses without such procedure, show that
the year-on-year rate of change is minus 5.3 percent for 2020. On the other hand, statistics compiled
by Tokyo Shoko Research Ltd. indicate that the year-on-year rate of change is 14.6 percent for 2020.
the real GDP growth rate is projected to register a significant negative figure of minus 5.6
percent for fiscal 2020, 3.9 percent for fiscal 2021, and 1.8 percent for fiscal 2022. By fiscal
year, real GDP will only return to its 2019 level in around fiscal 2022.
The risks to the aforementioned baseline scenario are skewed to the downside. COVID-19
has resurged at home and abroad, and the extent to which the impact will push down
economic activity is highly uncertain. It is encouraging that vaccination has started in some
countries, but the pace of distribution and the effects of the vaccines entail uncertainties. For
the time being, attention should continue to be paid to the consequences of COVID-19 and
their impact on domestic and overseas economies. In addition, while the impact of
COVID-19 remains, it is also uncertain whether growth and inflation expectations will not
decline substantially and financial system stability will be maintained. With these factors in
mind, the Bank will continue to examine developments in domestic and overseas economies
carefully.
C. Price Developments
Let me move on to price developments (Chart 7). The year-on-year rate of change in the
consumer price index (CPI, all items less fresh food) has been negative. That said, when
excluding the effects of temporary factors such as the decline in energy prices and discounts
on hotel charges through the "Go To Travel" campaign, the rate has been slightly positive.
According to anecdotal information from firms, price cuts that aim at stimulating demand
have not yet been observed widely to date, and the economy has not returned to deflation
despite a significant decline in economic activity. At present, a price decline has been seen
only to a limited degree compared with that of a decline in the output gap.
The year-on-year rate of change in the CPI is likely to be negative for the time being, but
thereafter is expected to turn positive and then increase gradually with the effects of
temporary factors dissipating and the economy improving (Chart 6). The medians of the
Policy Board members' forecasts of the inflation rate in the January Outlook Report indicate
that the CPI is projected to be minus 0.5 percent for fiscal 2020, 0.5 percent for fiscal 2021,
and 0.7 percent for fiscal 2022. The Bank has not judged thus far that prices will see an
overall and sustained decline and that the economy will return to deflation. That said,
attention should be paid not only to the impact of COVID-19 but also to risks that are
specific to prices. The latest Outlook Report points to two risks, which are uncertainties
over firms' price-setting behavior and developments in foreign exchange rates and
international commodity prices. In particular, we pay great and utmost attention to the
possible impact of developments in foreign exchange rates on prices.
II. The Bank's Conduct of Monetary Policy
Now, I will talk about the Bank's conduct of monetary policy. COVID-19 has been
significantly affecting developments in economic activity and prices as well as financial
conditions. In this situation, the Bank judges that the following responses are important to
address the COVID-19 shock first and foremost: to provide support for corporate financing
so that firms can sustain their businesses and to maintain stability in financial markets in
order to prevent deterioration in the real economy, such as in employment.4 At the same
time, given that downward pressure is likely to be exerted on economic activity and prices
for a prolonged period due to the impact of COVID-19, it is necessary to consider the
appropriate future conduct of monetary policy.
A. Monetary Policy Responses to the Impact of COVID-19
Let me start with responses to be made for the time being (Chart 8). The Bank has
conducted powerful monetary easing since last spring in response to COVID-19 through the
following three measures: (1) the Special Program to Support Financing in Response to the
Novel Coronavirus (COVID-19) to provide support mainly for corporate financing; (2) an
ample and flexible provision of funds, mainly by purchasing Japanese government bonds
(JGBs) and conducting the U.S. dollar funds-supplying operations; and (3) active purchases
of exchange-traded funds (ETFs) and Japan real estate investment trusts (J-REITs).
The Bank's responses have had positive effects (Chart 9). Global financial markets became
highly volatile last spring but have regained stability due to large-scale responses made by
governments and central banks around the world, including the Bank of Japan. Although
firms' financial positions have been weak, the environment for external funding has
remained accommodative owing to the Bank's and the government's responses as well as
active efforts made by financial institutions. Financial institutions' lending attitudes have
remained accommodative. The year-on-year rate of change in the amount outstanding of
bank lending and that in the aggregate amount outstanding of CP and corporate bonds have
continued to register high growth.
However, with the economy improving at only a moderate pace, corporate financing is
likely to remain under stress. Under these circumstances, the Bank decided at the December
MPM last year to extend the duration of the Special Program by six months until the end of
this September, thereby continuing to provide support for corporate financing. It will
continue to firmly conduct the current monetary easing, including this program. It also will
closely monitor the impact of COVID-19 and will not hesitate to take additional easing
measures if necessary.
B. Assessment for Further Effective and Sustainable Monetary Easing
Next, I will talk about responses to be taken in the future. The Bank decided to conduct an
assessment for further effective and sustainable monetary easing, with a view to achieving
the price stability target of 2 percent, and make public its findings, likely at the March
MPM.
I would like to first touch on the global environment surrounding the monetary policy
conduct. Since the Global Financial Crisis (GFC) during 2007 through 2008, amid the
situation of a declining trend in the natural rate of interest -- which balances the economy's
gross demand and potential GDP -- low growth, low inflation, and low interest rates have
been prolonged in advanced economies and the term "Japanification" has been discussed
frequently.5,6 As the policy interest rates likely will fall to the effective lower bound, the
central banks of those economies have faced the common challenges of how to enhance the
effectiveness and credibility of monetary policy. With these challenges in mind, the central
banks in the United States and Europe -- the Federal Reserve and the European Central
Bank (ECB) -- have reviewed their frameworks of monetary policy recently.
The Bank has faced these challenges earlier than these central banks. It started to pursue
large-scale monetary easing from 2013 by introducing quantitative and qualitative monetary
easing (QQE). In summer 2016, it conducted a comprehensive assessment, which is
equivalent to a review of the framework of monetary policy. Based on its findings, the Bank
introduced "QQE with Yield Curve Control" in September 2016. This consists of yield
curve control, in which the Bank controls short- and long-term interest rates, and an
inflation-overshooting commitment, in which the Bank commits itself to expanding the
monetary base until the year-on-year rate of increase in the actual CPI exceeds 2 percent
and stays above that level in a stable manner. Under this framework, the Bank has continued
with the large-scale monetary easing to date.
The inflation-overshooting commitment is a commitment to strongly influencing people's
inflation expectations with the aim of attaining a situation where the inflation rate is 2
percent on average over the business cycle. In this regard, the Federal Reserve conducted a
review of the monetary policy framework in terms of strategy, tools, and communications,
and announced last summer that it would "seek to achieve inflation that averages 2 percent
over time" as a makeup strategy.7,8 The Federal Reserve's thinking behind this review has
some commonalities with the Bank's that has been adopted already for the conduct of
monetary policy. Given that we have been addressing the same challenges, the Bank would
like to take advantage of other central banks' discussions and experiences.
6
As for "Japanification," see Wakatabe, M., "Japan's Economy and Monetary Policy," speech at a
meeting with business leaders in Ehime, February 5, 2020, https://www.boj.or.jp/en/announcements
/press/koen_2020/ko200205a.htm/.
7
"Statement on Longer-Run Goals and Monetary Policy Strategy," August 27, 2020,
https://www.federalreserve.gov/monetarypolicy/files/FOMC_LongerRunGoals_202008.pdf.
8
A makeup strategy is the idea that central banks compensate for past inflation shortfalls with
policy stances to generate higher inflation in the future.
As for the Bank's upcoming assessment, it should start with examining the effects of "QQE
with Yield Curve Control" on financial conditions as well as developments in economic
activity and prices. Let us remind ourselves of how the transmission mechanism of
monetary easing works. The mechanism is assumed to be as follows (Chart 10). First of all,
through yield curve control, nominal interest rates become stable at low levels across the
entire yield curve. At the same time, inflation expectations are raised through the
inflation-overshooting commitment. As a result, real interest rates, which are calculated by
subtracting inflation expectations from nominal interest rates, stay at low levels. The key
here is real interest rates. When the economy is in deflation, firms' and households' debt
burden in real terms hovers at a high level even if nominal interest rates are low.9 The low
real interest rates improve financial conditions through low funding costs as well as
favorable financial and capital markets, thereby encouraging economic activity and
improving the output gap. Improvement in the output gap in turn pushes up the actual
inflation rate, together with a rise in inflation expectations.
9
In 1923, the British economist John Maynard Keynes explained this as follows: "Economists draw
an instructive distinction between what are termed the 'money' rate of interest and the 'real' rate of
interest. If a sum of money worth 100 in terms of commodities at the time when the loan is made is
lent for a year at 5 per cent interest, and is only worth 90 in terms of commodities at the end of the
year, the lender receives back, including his interest, what is only worth 941/2. This is expressed by
saying that while the money rate of interest was 5 per cent, the real rate of interest had actually been
negative and equal to minus 51/2 per cent. In the same way, if at the end of the period the value of
money had risen and the capital sum lent had come to be worth 110 in terms of commodities, while
the money rate of interest would still be 5 per cent the real rate of interest would have been 151/2 per
cent.
"Such considerations, even though they are not explicitly present to the minds of the
business world, are far from being academic. The business world may speak, and even think, as
though the money rate of interest could be considered by itself, without reference to the real rate. But
it does not act so. The merchant or manufacturer, who is calculating whether a 7 per cent bank rate is
so onerous as to compel him to curtail his operations, is very much influenced by his anticipations
about the prospective price of the commodity in which he is interested." Keynes, J. M., A Tract on
Monetary Reform (London: Macmillan and Co., Limited, 1923), pp. 20-21.
Economic and financial developments since the introduction of QQE in 2013 have been
more or less in line with the assumed mechanism (Charts 11, 12, and 13).10 Real interest
rates have been clearly negative due to nominal interest rates that are extremely low and
inflation expectations that are higher than those prior to the introduction of QQE. In this
situation, the year-on-year rate of change in the amount outstanding of bank lending has
continued to be at around 2 percent. In financial and capital markets, foreign exchange rates
have been stable on the whole and stock prices have been on an uptrend. The output gap has
continued to expand since 2017, when it turned clearly positive.11 The unemployment rate
has declined, the active job openings-to-applicants ratio has increased, and the number of
employed persons has risen.12 Base pay increases have continued for seven consecutive
years, and the positive annual CPI inflation has taken hold. The economy is no longer in
deflation in the sense of a sustained decline in prices.
However, the price stability target of 2 percent has not yet been achieved. Even though
upward pressure on wages has increased steadily, as can be seen in a rise in scheduled cash
earnings per hour of part-time employees, the rate of increase in inflation expectations has
not expanded. This is because people's mindset and behavior based on the assumption that
prices will not increase easily have been deeply entrenched under prolonged deflation and it
has been taking time for such mindset and behavior to change. Also, firms' room to raise
productivity and the high elasticity of labor supply have absorbed inflationary pressure.
Under these circumstances, the COVID-19 shock occurred last spring. Because of this
additional impact, inflation expectations have weakened somewhat and the output gap has
deteriorated significantly. Since downward pressure on economic activity and prices is
10
For a recent academic assessment on the policy, see Honda, Y. and Inoue, H., "The Effectiveness
of the Negative Interest Rate Policy in Japan: An Early Assessment," Journal of the Japanese and
International Economies, vol. 52 (June 2019): pp. 142-53.
11
The estimation of the output gap should be interpreted with some latitude since the results could
be different depending on the estimation methods.
12
Such favorable employment market outcomes have not resulted from a declining population. For
details, see Wakatabe, M., "Japan's Economy and Monetary Policy," speech at a meeting with
business leaders in Aomori, June 27, 2019, https://www.boj.or.jp/en/announcements/press
/koen_2019/ko190627a.htm/.
likely to continue for a prolonged period, it will take considerable time to achieve the price
stability target of 2 percent.
On this basis, the Bank will conduct an assessment for further effective and sustainable
monetary easing, with a view to supporting the economy and thereby achieving the price
stability target of 2 percent. In doing so, since the price stability target of 2 percent and the
framework of "QQE with Yield Curve Control" have been working well to date, the Bank
judges that there is no need to change them. There are mainly three reasons for this. First,
the price stability target of 2 percent has been, and remains, the starting point for pursuing
monetary easing. In the reviews of other central banks, which are facing challenges
common to Japan, they are trying to seek more effective ways to achieve the target level,
rather than lower it.13 Second, as I mentioned earlier, economic and financial developments
have been more or less in line with the assumed mechanism under "QQE with Yield Curve
Control." Despite the unexpected shock of COVID-19, the basic stance of the monetary
policy conduct toward achieving the price stability target of 2 percent is reasonable. Third,
"QQE with Yield Curve Control" is a framework through which a policy mix of fiscal and
monetary policies can be effectively achieved while the independence of a central bank is
maintained. In response to COVID-19, the government has been increasing the issuance of
JGBs to implement its economic measures while making use of the low interest rate
environment. Meanwhile, the Bank has set the target level of policy interest rates as part of
the monetary policy measures, taking into account developments in economic activity and
prices as well as financial conditions, and has been achieving accommodative financial
conditions accordingly. Under "QQE with Yield Curve Control," the Bank and the
government can cooperate with each other while fulfilling their respective roles.14
Thus, based on the assumption that the Bank will continue with "QQE with Yield Curve
Control," it will conduct an assessment on the manner of operations and various measures
such as asset purchases. Whether to make changes to various measures depends on the
findings of the assessment, so it is not appropriate to make any specific comments at this
point. That said, the assessment will be conducted with the following points in mind. First,
the Bank should conduct effective monetary easing while containing so-called costs of
policy measures as much as possible. "QQE with Yield Curve Control" is a framework for
conducting monetary easing while striking a balance between costs and benefits, but it is
necessary to seek more effective ways to conduct monetary policy in terms of finding such
a balance. Second, while it is expected that monetary easing will be prolonged, the Bank
should enhance the sustainability of the conduct of monetary policy during normal times
and be nimble in responding to changes in developments in economic activity and prices as
well as financial conditions. The Bank could conduct monetary policy more flexibly in a
prioritized manner depending on changes in such developments. In conducting the
upcoming assessment, I would like to emphasize that the Bank does not intend to tighten
monetary easing. It also does not aim at only containing costs of policy measures. Rather,
the Bank will consider how to be nimble in conducting effective monetary easing while
taking care of costs.
So far, I have explained the Bank's thinking on its monetary policy conduct.
Communication is an important factor in conducting monetary policy. The central banks'
intentions are not necessarily interpreted in the way they meant, and some recent research
has clarified this difficulty and proposed some ways to improve their communications.15
The Bank has communicated widely to the public through various channels such as
speeches, press conferences, opportunities to exchange views like today's meeting, its
website, and SNS. It will continue to make efforts and seek ways to explain its thinking on
the monetary policy conduct, including the content of the upcoming assessment, as clearly
as possible.
III. Current Situation of and Outlook for Kanagawa Prefecture's Economy
Next, I would like to talk about the economy of Kanagawa Prefecture. As with Japan's
economy as a whole, the prefecture's economy has picked up as a trend, although it has
remained in a severe situation due to the impact of COVID-19. However, the pace of
improvement is likely to be only moderate while vigilance against COVID-19 continues. In
addition, the population of Kanagawa Prefecture is expected to start declining within the
next few years, and the impact of the declining and aging population on the economy is
likely to intensify.
However, the declining and aging population will not automatically lead to an economic
decline. The important thing is how to address and tackle the issue. Kanagawa Prefecture
seems to be very active in its efforts to achieve economic growth while looking to the future.
Here, I would like to focus on three of the most notable examples.
The first is the concentration of research and development (R&D) centers. While Kanagawa
Prefecture has always had the largest number of people engaged in R&D in Japan, the
concentration of R&D centers has accelerated in recent years. For example, leading
companies at home and abroad, as well as universities, have actively moved their R&D
facilities and campuses into the Keihin Coastal Area Life Innovation International Strategic
Comprehensive Special Zone and the Minato Mirai 21 district of Yokohama City, and these
areas have become a major R&D center in Japan. Industry-academia-government research
collaboration should give rise to internationally competitive leading industries, which will
serve as an engine for technological innovation.
The second notable example is the development of logistics centers. With its international
trading ports of Yokohama, Kawasaki, and Yokosuka, Kanagawa Prefecture has long been
a logistics hub for Japan, acting as a major window connecting the country with the rest of
the world. With the further development of the expressway network that directly connects
to the capital, large-scale logistics facilities equipped with state-of-the-art equipment have
started to be constructed one after another in recent years, mainly in the central part of the
prefecture along these expressways. More efficient and upgraded logistics will contribute to
raising productivity regardless of industry. The importance of Kanagawa Prefecture as a key
logistics hub is expected to continue increasing in the future.
The third example is developments linked to tourism. Kanagawa Prefecture is blessed with
many tourist resources, including Yokohama City, an urban tourist destination, Hakone, one
of the best hot spring resorts in Japan, Kamakura, a place of history and culture, and
Shonan/Enoshima, an area for marine sports. However, at present, the number of visitors to
these tourist spots has been declining significantly with the COVID-19 pandemic, and the
situation has been extremely severe. That said, I have heard that, even in this situation,
many firms have responded flexibly to the changes in consumer behavior due to the
pandemic and have made efforts to meet the needs, for example, of those who want to stay
longer in one place and enjoy leisure time and meals. There is also active promotion of
tourism from a longer-term perspective. For example, Kamakura City is working to increase
the number of tourists in response to the fact that the city is the setting for the 2022 NHK
Taiga Drama
(the annual year-long historical drama television series produced by NHK
[Japan Broadcasting Corporation]) "Kamakura-dono no 13-nin (13 Samurais of the
Kamakura
Shogunate)." In addition, Yokohama City is scheduled to host the World
Horticultural Exhibition in 2027. These various efforts are expected to boost further
development of the tourism industry.
Kanagawa Prefecture has a long history of close ties with foreign countries. It opened its
ports to the world about 160 years ago with the arrival of Commodore Perry. As it
developed as the gateway to Japan, new cultures, knowledge, and ways of thinking flowed
in along with people and goods, and the economy of the prefecture grew while taking them
in with flexibility. This flexibility, I believe, has been the driving force for the prefecture to
respond to the recent various changes in the environment and has led to active efforts to
foster and develop industry. I hope that Kanagawa Prefecture maximizes its potential and
continues to make strong strides toward further growth.
Conclusion
Lastly, I would like to briefly touch on the medium- to long-term economic issues
confronting Japan. There is concern that the COVID-19 sh