yukitoshi funo : economic activity and prices in japan, and monetary policy in japan speech by mr yukitoshi funo, member of the policy board of the bank of japan, at a meeting with business leaders, miyagi, 21 june 2018. * * * i. recent economic and price developments a. overseas developments i would like to begin my speech by talking about overseas economies. the business sentiment of manufacturing firms on a global basis has maintained its improving trend, and the world trade volume has continued to recover. in this situation, overseas economies have continued to grow firmly on the whole. in terms of the outlook, overseas economies are expected to continue growing firmly. according to the world economic outlook, released in april 2018 by the international monetary fund ( imf ), the global growth rate is projected to be 3. 9 percent in both 2018 and 2019. looking at developments by major region, the u. s. economy has been expanding and the european economy has continued to recover. the chinese economy has continued to see stable growth on the whole. other emerging economies and commodity - exporting economies have been recovering moderately on the whole, reflecting in particular an increase in exports and the effects of those economies ’ stimulus measures. as for the outlook, the u. s. economy is expected to keep expanding and the european economy is projected to continue recovering. the chinese economy is likely to broadly follow a stable growth path as authorities conduct fiscal and monetary policy in a timely manner. other emerging economies and commodity - exporting economies are likely to continue their moderate recovery on the whole. risk factors to the overseas economic outlook are wide ranging, as exemplified by ( 1 ) the u. s. economic policies and their impact on global financial markets, ( 2 ) developments in emerging and commodity - exporting economies, ( 3 ) negotiations on the united kingdom ’ s exit from the european union ( eu ) and their effects, and ( 4 ) geopolitical risks. in addition, uncertainty is high regarding future developments in trade policies worldwide, and therefore these developments warrant attention. i hold the view that it is important to stay vigilant regarding these risk factors, especially now that overseas economies are continuing to grow firmly. b. japan ’ s economy and prices 1. economic activity i will now discuss the economic situation in japan. japan ’ s economy is expanding moderately, with a virtuous cycle from income to spending operating. the real gdp growth rate continued to represent positive growth for eight consecutive quarters on

of such factors as supply - side constraints. furthermore, in response to the tight labor market conditions, firms are making labor - saving investments not only at production sites but in various workplaces. at the same time, they are proceeding with streamlining and sophistication of business process. for example, the financial industry is moving ahead with advancing financial technology as well as making efforts to improve business efficiency. in the retail industry, while progress is being made with saving labor at stores, integration of sales at brick - and - mortar stores and online sales is also taking place. if such initiatives toward structural reforms and growth strategy proceed, japan ’ s growth potential will likely rise. however, attention needs to be paid to the point that these initiatives are diverse and their pace of progress is not uniform. for example, the situation of labor shortages varies depending on types of job and industry. for this reason, it is necessary to keep a close watch on whether any imbalances arise amid increasing work demand across japan. let me note that raising growth potential is a time - consuming task. therefore, while the bank ’ s conduct of monetary policy stimulates aggregate demand and suitably tight supply - demand conditions are being maintained, a virtuous cycle in which active demand encourages progress in various initiatives should remain intact for a long period of time. i believe that, with a view to achieving its price stability target and realizing sustainable economic growth in a coordinated manner, the bank should continue with its monetary easing policy and firmly support the various initiatives taken by a wide range of entities. 5 / 5 bis central bankers'speeches