two global factors, region - specific factors have contributed to the recent deceleration in the global economy. the chinese economy has shown some weakness due to the lingering impact of deleveraging policy measures, together with trade tensions. in the euro area, exports have decelerated, automobile production has been hampered by delays in adjusting to new emissions regulations, and business sentiment have deteriorated due to heightened uncertainty regarding political and economic conditions. in short, these several factors have contributed to the slower pace of growth in the global economy. what then are the prospects for the global economy? the most recent world economic outlook from the international monetary fund ( imf ), published in april, indicates that the global economy will regain positive momentum during the second half of this year. first, economic policy measures in china and other regions will gradually begin to take effect. china has decided to implement or has already implemented a range of policy measures since the second half of last year, including fiscal and monetary policies. some asian emerging economies are also expected to increase fiscal expenditures. in emerging economies in general, monetary policy space has increased as the federal reserve has adopted a patient stance regarding its policy normalization. concerns over capital outflows, currency depreciation, and heightened inflation have also eased relative to last year. second, production adjustments are likely to show progress in it - related goods. manufacturers in asia, including those in japan, are now in an adjustment phase, but production of electronic parts is expected to turn around and increase gradually in due course. however, there remains a high degree of uncertainty regarding these prospects, and the downside risks are large. among them, i will touch upon four risk factors here. the first is the impact of trade tensions. although trade negotiations seem to have progressed somewhat, a number of issues remain to be resolved. due to the widening range of tariff increases, trade costs may rise, and corporate activity could be subdued due to reconsideration of production sites and global value chains. the second risk is the effects of economic policy measures, such as those in china. china has implemented a range of tax reduction measures, together with an increase in infrastructure investment. the effect of these tax reductions, however, depends on the extent to which households and firms increase their spending. households'and firms'spending is affected by their sentiments and prospects for the economy. since we have seen heightened uncertainty regarding, for example, trade tensions, we should be cautious about the effectiveness of these policy measures. the

##ulating economic and financial sector imbalances. looking back on history, we have seen how asset bubbles in stocks and real estate, as well as excessive lending by financial institutions, have contributed to overheating the economy, and vice versa, and how current account deficits and accumulated external debt have become the source of crises. one lesson history teaches us is that, by helping to stem the source of crises, appropriate economic policy management is definitely the first line of defense in crisis prevention. rigorous monitoring of the global economy and financial conditions is crucial to detecting the early signs of crisis. with this in mind, we intensively examine global economic and financial conditions at every g20 meeting. of course, experience has taught us the difficulty of prior detection of excessive activities and imbalances. that is why we also need to prepare crisis management policy tools to prevent crises from spreading. the imf's lending facilities play a crucial role in such crisis management. one of the important functions of the imf is to provide short - term lending to a country with a balance - of - payments crisis. the imf's role in times of crisis has become even more important as international trade and financial transactions have expanded. besides the imf lending in times of crisis, regional financing arrangements ( rfa ) are also expected to be used. in asia, the chiang mai initiative multilateralization ( cmim ) is one such arrangement. japan, china, korea, and the asean countries participate in the initiative. once a crisis occurs, each country is expected to provide the funds necessary to prevent the crisis from spreading. in order to mobilize funds promptly, there is the so - called de - link portion of the fund. this portion comprises 30 percent of the total funds, and is not directly linked to the lending from the imf. we have also seen an expansion in bilateral swap agreements. when a crisis occurs, countries can use a swap agreement to exchange their currency for another in order to obtain the funds needed for international transactions. in short, we now have multiple layers of measures to cope with global financial crises, with imf lending playing the central role, supplemented by regional financing arrangements and bilateral swap agreements. thanks to this enhancement of international financial architecture, together with the strengthening of financial regulations following the global financial crisis, it is fair to say that the resilience of the global economy and financial system has been increased. nevertheless, it is important to remain vigilant as global financial and economic