retaliation from all affected regions on an equivalent amount of u. s. exports. “ scenario 4 : confidence shock ” introduces a temporary global shock to confidence on top of scenario 3. it is assumed that advanced economies see risk premiums increase by 30 basis points - - about half the increase observed during the “ taper tantrum ” - - around two years after the additional tariffs, while emerging economies would face a shock that is twice as large. source : imf, ” g20 surveillance note, july 21 - 22, 2018. ” chart 3 real gdp growth and breakdown by component ann., q / q % chg. private consumption government spending imports real gdp private business fixed investment, etc. exports change in inventories, etc. - 5 - 10 - 15 cycy 17 17 source : cabinet office, “ quarterly estimates of gdp for april - june 2018 ( first preliminary estimates ). ” chart 4 outlook for economic activity and prices ( july 2018 outlook report ) medians of policy board members ’ forecasts, y / y % chg. fiscal 2018 forecasts made in april 2018 fiscal 2019 forecasts made in april 2018 fiscal 2020 forecasts made in april 2018 real gdp cpi ( all items less fresh food ) + 1. 5 + 1. 1 + 1. 6 + 1. 3 + 0. 8 + 1. 5 + 0. 8 + 1. 8 + 0. 8 + 1. 6 + 0. 8 + 1. 8 note : figures for the cpi ( all items less fresh food ) exclude the direct effects of the consumption tax hike scheduled to take place in october 2019. source : bank of japan, “ outlook for economic activity and prices, ” july 2018. chart 5 household consumption before and after consumption tax hikes consumption before and after tax hikes real private consumption by type apr. 1996 and apr. 2013 = 100 104. 9 durable goods 104. 6 120 103. 9 non - durable goods services 100. 5 122. 3 tax hike in fiscal 2014 ( from 5 % to 8 % ) tax hike in fiscal 1997 ( from 3 % to 5 % ) apr. 2013 = 100 106. 9 106. 3 103. 0 99. 4 95. 8 87. 7 96. 8 13 fy 1996 14 fy 2013 92. 8 note : the latest figures are as of june 2001 and june 2018. source : cabinet office, “ synthetic consumption index. ” 13 年 [UNK] fy 2013 14 notes : 1. the latest figures are

without close cooperation among countries. this is indeed one of the key lessons from our policy responses to the global crisis. in today ’ s highly interconnected world, financial disruptions in one country or region would be no longer a problem of the country or region alone. by the same token, policy measures taken by a country can easily affect other countries. for example, extraordinary monetary easing by major central banks does appear to have helped their home countries contain the fallout from the crisis. but many emerging countries were forced to confront adverse financial spillovers from large and sharp swings in the global liquidity condition. in short, coordinated global efforts to rein in the excessive global liquidity and cross - border spillovers have fallen short of expectations. and we all know too well that international policy cooperation has always been difficult to achieve. but history is not destiny. nor does it mean that we should give up. a global solution is needed more than ever to overcome the current crisis, which is a global problem. and for the benefit of all, the global community should be more united than ever in tackling the enormous challenges that lie ahead of us. concluding remarks ladies and gentlemen, the world economy is still struggling to find its way out of the great recession. it is in need of stronger and wiser policy actions that can address the very complex economic and financial troubles we are facing now. but our understanding of what went wrong and what should be done is still incomplete. this is even more the case if we turn our attention to the future of the global financial system and to the monetary and macro - prudential policy framework. as i mentioned earlier, i believe that global policy cooperation should be a priority in our search for an exit from the current crisis. i also believe that effective collaboration between policymakers and academia is every bit as crucial as that between policymakers. we do not sit idle by during the crisis. nor should we sit idle by, being complacent with the conventional wisdom. we must bridge the gap between reality and our perception of it. it is our duty and indeed our very real privilege to engage in and work through the conundrums we encounter today. i look forward very much to a new thinking on monetary and macro - prudential policy. and i am confident that this conference will contribute to developing the new thinking that we all need. once again, i wish to extend my heartfelt appreciation to all participants, and my hope for your active discussion of new insights and views