by the international monetary fund ( imf ), the global growth rate also is projected to recover to 3. 4 percent for 2020, which is around the past average, from 3. 0 percent for 2019. there are three major reasons behind the bank's projection. first is that uncertainties over the global economy, including developments in u. s. - china trade negotiations, have eased somewhat. as i explained earlier, the global economic slowdown this year is attributable mainly to political and geopolitical uncertainties, such as the u. s. - china trade friction and brexit. it is significant that these uncertainties have been easing, at least to some extent. second is that the global cycle for it - related goods, which had been exerting downward pressure on the global economy this year, has been picking up. world semiconductor shipments recently have turned to an increase. the adjustment phase of the global cycle for it - related goods, which started from around mid - 2018, finally seems to be coming to an end. third is the effects of each country's macroeconomic policy. since the turn of this year, many emerging economies have reduced their policy rates, and the federal reserve and the european central bank ( ecb ) have conducted monetary easing. this is likely to underpin the global economy. however, the bank considers that downside risks regarding such outlook for the global economy remain significant. as for u. s. - china trade negotiations, there remain points of disagreement between the two countries, such as those regarding industrial policy. in addition, it is necessary to pay attention to such factors as uncertainties over emerging economies and geopolitical risks. thus, future developments in the global economy likely will continue to warrant close attention for the time being. developments in japan's economy next, i will talk about japan's economy ( chart 2 ). looking back on this year, reflecting the effects of the global economic slowdown, exports have continued to show some weakness and manufacturers'sentiment has become cautious. on the other hand, domestic demand has continued on an uptrend, and nonmanufacturers'sentiment has remained at a high level on the whole. in the past, there were many cases in japan where changes in the global economy or external demand affected overall developments in the economy relatively quickly. however, what is unique to the current phase is that domestic demand has remained firm so far despite weak external demand. one factor under

growth rate would be around 3 percent ; that is, 2 percent inflation plus 1 percent labor productivity. on this point, minimum wages have been raised by around 3 percent for four consecutive years from 2016. i hope that firms'stance will continue to shift toward further raising wages and prices under the favorable economic environment, and that a virtuous cycle of wages and prices will gain further strength. conclusion as we are almost out of time, i would like to conclude my speech. today, i talked in some detail about the challenges to sustaining the virtuous cycle of japan's economy from the viewpoint of expectations for firms. i also touched on the importance of ( 1 ) firms continuing with positive investment, which leads to enhancing productivity, in order to raise the economic growth potential and of ( 2 ) making firms'stance shift toward further raising wages and prices to strengthen the virtuous cycle of wages and prices. next year, the olympic and paralympic games will be held in tokyo. the previous tokyo games were hosted in 1964, and back then, japan was full of energy during the period of high economic growth. looking back on that year, there was a series of historical events that boosted people's confidence, such as joining the oecd in april as well as launching the tokaido bullet train and hosting the olympic games in october. on the other hand, economic expansion that had lasted for two years, dubbed the olympics boom, had its peak in october 1964 and japan's economy experienced a downturn for a year thereafter. from this experience, some worry about economic activity from the second half of next year, but there is no need to be too pessimistic. japan's economy has improved significantly, with the virtuous cycle operating. corporate activities, which had remained cautious, steadily have become vigorous. the bank will continue to firmly fulfill its responsibility as a central bank of achieving the price stability target so that japan's economy will grow in a sustainable manner under the virtuous cycle of the economy. i would like to close my speech by expressing my sincere hope that the year 2020 will be a wonderful one for all of you. thank you for your attention. toward sustaining a virtuous cycle speech at the meeting of councillors of nippon keidanren ( japan business federation ) in tokyo december 26, 2019 haruhiko kuroda governor of the bank of japan introduction i. this year's economic developments at home and abroad ii. the bank '