the assessment, the bank will carry out its mandate of achieving price stability by continuing to persistently conduct powerful monetary easing. to this end, it is important to address the impact of covid - 19 for the time being. the bank will firmly pursue current monetary easing through the three measures, thereby supporting the economy. thank you very much for your attention. outlook for economic activity and prices and monetary policy speech at a meeting held by the naigai josei chosa kai ( research institute of japan ) ( via webcast ) may 19, 2021 kuroda haruhiko governor of the bank of japan introduction i. economic developments ii. price developments iii. the bank's conduct of monetary policy conclusion chart 1 i. economic developments recent developments in economic activity consumer activity index ( real ) real gdp s. a., cy 2019 = 100 120 s. a., cy 2019 = 100 s. a., cy 2019 = 100 durable goods nondurable goods exports and production services 19 / q1 real exports industrial production q3 20 / q1 q3 21 / q1 jan. july jul. jan. july jul. jan. jan. jul. july jan. jul. july jan. sources : cabinet office ; bank of japan ; ministry of economy, trade and industry ; ministry of finance, etc. chart 2 i. economic developments the bank's forecasts for economic activity and prices ( april 2021 outlook report ) forecasts of the majority of the policy board members y / y % chg. real gdp cpi ( all items less fresh food ) fiscal 2020 ( actual figures ) - 4. 6 - 0. 4 fiscal 2021 + 3. 6 to + 4. 4 [ + 4. 0 ] 0. 0 to + 0. 2 [ + 0. 1 ] + 3. 3 to + 4. 0 [ + 3. 9 ] + 0. 3 to + 0. 5 [ + 0. 5 ] + 2. 1 to + 2. 5 [ + 2. 4 ] + 0. 5 to + 0. 9 [ + 0. 8 ] + 1. 5 to + 2. 0 [ + 1. 8 ] + 0. 7 to + 0. 8 [ + 0. 7 ] + 1. 2 to + 1. 5 [ + 1. 3 ] + 0. 7 to + 1. 0 [ + 1. 0 ] forecasts made in january 2021 fiscal 2022 forecasts made in january 2021 fiscal 2023 note

and to strengthen multilateral adjustment mechanisms to deal with imbalances and sources of instability. imf surveillance 5. the surveillance function is critical to the imf ’ s overall mandate. by focusing on vulnerabilities and detecting the onset of crises, it assumes a vital, preemptive role in preserving global and national stability. effective implementation at both multilateral and bilateral levels is the key to providing surveillance with incisiveness and traction. we believe bis central bankers ’ speeches that this can be achieved within the ambit of the existing provisions of the articles of agreement. if, however, there is a consensus that there are gaps in the legal mandate that hinder effective implementation, an amendment to the articles is the optimal approach. ensuring consistency and comprehensiveness across the various levels of surveillance is important, as is the candour and evenhandedness of the imf – that systemic risks are pointed out irrespective of where they may originate. we need to stress that multilateral surveillance by the imf should not lose sight of sovereign debt concerns of developed countries by adopting tighter screening criteria for developing countries that have actually seen fiscal improvement relative to the advanced economies. managing capital flows 6. as the recovery of emerging and developing countries has gained momentum, capital flows have surged back to near pre - crisis levels. these flows have exhibited considerable volatility, imparting macroeconomic instability in the event of sudden stops and reversals, eroding competitiveness and complicating the setting of macroeconomic policies. policy prescriptions with respect to capital flows should be even - handed. so far as lumpy and volatile flows are a spillover from policy choices of advanced economies, managing capital flows should not be treated as an exclusive problem of emerging market economies and the burden of adjustment should be shared. how this burden will be shared raises both intellectual and practical challenges. 7. as regards multilateral strategies to managing capital flows, it is difficult to follow an approach that seeks to establish, standardize, prioritize or restrict the range of policy responses of the member countries that are facing large surges in volatile capital inflows. based on their experience, policymakers must have flexibility and discretion to adopt policies that they consider appropriate to mitigate risks through macroeconomic, prudential and capital account management policies without a sense of stigma attached to particular instruments. given the state of knowledge on these issues, it will be premature to consider amending the articles to either give the