Thus, even if our economy’s many strengths (a very small public sector, privatisation, low public debt, etc.) remain in place and there is no slippage in progress made, Spain will face more demanding situations for having forgone these two possibilities. Naturally, were we to backtrack on competition, for instance, or were the budget deficit to surge to unsustainable levels, our growth would be even more severely impacted, as occurred in the past decade in some European countries. The only possible means here of recouping the external competitiveness lost following the latest upturn is to increase our productivity. And higher productivity, in addition to requiring a priority focus on education and training, inevitably involves structural reforms in numerous fields. As we have limited time, I’ll refer exclusively to the reform of labour institutions, where the Banco de España researchers have made most valuable contributions. Also, this is surely the reform that can most contribute to resolving the problem most concerning Spaniards, namely unemployment. Yet while not mentioning them today, we should remember there are many other vital structural reforms needed, such as that of the rental market, boosting competition in services, railway freight transport, energy, public administration, etc., and that can also contribute to enhancing productivity and to a return to higher growth than the EU average. Clearly, inadequate labour institutions generate very harmful effects not only on productivity and economic growth, but also on employee welfare. Spaniards need little convincing of the problems unemployment poses, problems which assail us even when the business cycle is buoyant.

These are all very positive developments and you will be joining a vibrant community of financial institutions here in Singapore. Japan and the region’s recovery and growth Daiwa’s increased focus in South Asia attests to the dynamism of the region. Not only has the region shown resilience, it is now powering ahead. Led by ASEAN economies such as Vietnam, which is surging ahead strongly, India, Pakistan and the Middle East too are beckoning out to investors with their growth prospects. Trade and investments within the Asian region, and between Asia and the Middle East continues to grow. Notably, Japanese foreign direct investments into ASEAN has been increasing steadily again since 2003. In fact, it has reached more than $ billion1 which even outpaced that into China in 2006. The Japanese economy too, continues to impress. Economic conditions in Japan have improved remarkably and the data released suggests a continued and sustained growth. Japanese corporates are raking in record profits and capital investments too are surging ahead. They have once again begun to spread their wings overseas. Supporting these corporates, financial institutions like Daiwa too have benefited from this increased business activities. 1  Sources: Prepared by JETRO from Ministry of Finance Balance of Payments Statistics and Bank of Japan foreign exchange rates. BIS Review 72/2007  1  Partner to growth Where does Singapore fit into this climate of abundant growth opportunities? Located right at the confluence of trade links and business opportunities, Singapore has become a valuable partner to corporates and financial institutions like Daiwa.