Akira Amari: Abenomics may take 10 years to work

Japan's aggressive policies aimed at reviving its economy may take 10 years to have a full impact, Akira Amari, Japan's minister in charge of economic revitalisation, has told the BBC.

Known as Abenomics, these include easing monetary policy, boosting stimulus and reforming key sectors.

Some of these steps have already been introduced and have boosted growth.

But he warned that while it is easy to implement monetary stimulus measures, scaling them back can be tricky.

He told the BBC's chief business correspondent, Linda Yueh, that Japan's central bank was likely to "learn from the experiences" of the US Federal Reserve, which is widely expected to reduce its key stimulus programme in the coming months.

"The Fed Chairman, Ben Bernanke, is experimenting with it," Mr Amari said in an exclusive interview with the BBC.

"That's why one word from him can move stocks and currencies."

'Dozens of targets'

Japan's Prime Minister, Shinzo Abe, who came to power in December last year, has made reviving the economy his top priority.

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Abenomics aims to raise total capital investment by 10% within 3 years”

Akira AmariMinister in charge of economic revitalisation, Japan

He has unveiled a series of aggressive measures to try to achieve that.

The measures are based on what are known as the "three arrows" - monetary policy, fiscal stimulus and structural reforms - to ensure long-term sustainable growth in the world's third-largest economy,

The first arrow of monetary policy is aimed at ending Japan's nearly two-decades-long fight with deflation or falling prices.

One of the first steps that Mr Abe took was to get Japan's central bank to double its inflation target to 2%. He has even suggested that the bank should print "unlimited yen" to help achieve its inflation target.

The second arrow has prompted Mr Abe's government to announce plans to boost government spending on infrastructure, in order to help boost growth further.

Mr Amari told the BBC that the steps had already had a positive impact on the Japanese economy.

Revised data released last month showed that Japan's economy expanded 0.9% in the April-to-June quarter from the previous three months. That translates into an annualised growth of 3.8%.

Meanwhile, consumer prices in Japan have now risen for three months in a row.

Mr Amari said that the third arrow - reforming key sectors - was aimed at encouraging private investment in the country, which will aid growth even more.

He said that "Abenomics aims to raise total capital investment by 10% within three years", adding that the target was not a difficult one to achieve.

"It can be achieved in one-and-a-half years. The aim is to replace low productivity facilities with higher productivity ones."

However, he added that the government had "dozens of targets" in terms of sectors where it wants to boost investment and "each has its own timeframe, whether it's three or 10 years".

He said the government planned to introduce tax incentives, to encourage companies to increase their investment.

"By increasing investment by 10%, growth will be raised by 1.3%," he added.

Source: BBC

Why do Japanese children lead the world in numeracy and literacy?

Emphasis on rote learning, theory and compulsory study to age of 18 pays off, but critics say it stifles critical thought

Japan's state education system is often criticised for quashing original thought among pupils in favour of rote learning, and for placing an emphasis on theory rather than practical skills, especially when it comes to English. But it is this traditional approach that has helped Japanese pupils easily outperform their counterparts in England and Northern Ireland.

Formal, intense instruction in maths and the Japanese language begins at the age of six and continues through to 15, the earliest age at which pupils can leave school. Those who elect to go on to senior high school - the rough equivalent of an English sixth form college and a traditional route to higher education - through to age 18 must study an eclectic range of subjects, including maths, Japanese literature and English.

Japanese senior high school teachers, and their pupils, are often incredulous when they learn that 16- to 18-year-olds in England can drop maths and literature and study just three A-level subjects of their choice. Japan's approach - rote learning accompanied by regular reviewing and testing - has proved hugely successful in establishing basic academic skills among pupils. The country's literacy rate is frequently put at 99%.

According to guidelines introduced by the education ministry, Japanese children should have learned how to read 1,006 kanji - Chinese characters used in the modern Japanese writing system - by the time they leave primary school, and a further 1,130 characters by the time they end their compulsory education at the age of 15.

Those who continue to senior high school are expected to be able to write all 2,000-plus characters - considered the minimum requirement to function in Japanese society.

Source: The Guardian

IMF: Japan structural reforms critical to meeting inflation goal

Japan's government needs to implement structural reforms to boost the potential growth rate or it may be forced to launch more fiscal stimulus to meet the Bank of Japan's 2 percent inflation goal, the International Monetary Fund said.

Failure to include credible structural reforms in Prime Minister Shinzo Abe's economic policies, known as "Abenomics," would slow economic growth in Japan as well as in Asia, the IMF warned in an update to its World Economic Outlook.

The IMF welcomed Japan's plan to raise its sales tax to pay for welfare costs but said the government's decision to offset the blow with stimulus spending means it is under pressure to compile a fiscal discipline plan as soon as possible.

"Structural reforms will be critical to open up the additional policy space that may be needed to bring inflation up to the 2 percent target, "the IMF said in its report.

Abe's government will finalise a 5 trillion yen stimulus package in December. The measures will include tax breaks for companies and home owners, but the government has yet to decide how it will spend most of the money.

The IMF acknowledged that stimulus spending is likely to have a short-term benefit and that the economy could grow more than it forecast in 2014.

Japan's economy will grow 2.0 percent this year and then slow to 1.2 percent in 2014 due to the sales tax hike, the IMF said.

Those forecasts were little changed from July, when the IMF said Japan's GDP will expand 2.1 percent this year and 1.1 percent next year.

Source: Reuters

Japan current-account surplus plunges to record August low

Japan's current-account surplus unexpectedly shrank to a record low for an August, underscoring drags on the economy as Prime Minister Shinzo Abe tries to drive an exit from 15 years of deflation.

The surplus fell 64 percent from a year earlier to 161.5 billion yen ($1.7 billion), as overseas income dropped for the first time in nine months and imports exceeded exports, a Ministry of Finance report showed in Tokyo. The median forecast in a Bloomberg News survey of 27 economists was for a 520 billion yen surplus.Higher import costs are one of the side-effects of Abenomics, a package of policies that has weakened the yen and is intended to drive an economic revival. The next phase of the prime minister's growth strategy will be the focus of a Diet session due to begin next week.
"There's a low chance that the current-account balance will turn to a deficit in the coming months," said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo.
The Nikkei 225 Stock Average (NKY) fell 0.7 percent as of 10:05 a.m. in Tokyo.
The surplus was the lowest for any August since at least 1985, according to data compiled by Bloomberg

Source: Bloomberg

Japan may opt to give up tariffs on the five key product categories.

The government and ruling parties will begin considering whether tariffs on five categories of agricultural products that have been regarded as a "sanctuary" can be removed in tariff negotiations of the Trans-Pacific Partnership (TPP) multilateral trade initiative, in which 12 countries, including Japan and the United States, are participants, according to sources.

The government and the ruling parties have treated five categories of products-rice; wheat; beef and pork; dairy products; and farm products that are used as sweeteners, such as sugar cane-as key product categories for which tariffs should be maintained.

But now that the talks are facing difficulties, the government and ruling parties have to consider whether tariffs on some products in the categories can be removed.

There are 586 product items in the five key categories. Of them, 58 are of rice and 51 are of beef.

In economic partnership agreements which Japan has signed with 13 countries and one region, Japan has never abolished tariffs on the five key product categories.

China, Japan step up concerns over U.S. shutdown

China and Japan, the United States' biggest creditors, are increasingly worried the U.S. government shutdown and standoff over the debt ceiling could wreak havoc on their trillions of dollars of investments in U.S. Treasury bonds.

Beijing and Tokyo have publicly called on the White House and Congress to resolve the dispute, which could threaten a U.S. debt default as soon as next week, and Asia's two biggest economies are privately urging Washington to find a solution.Japanese officials held several emergency telephone conferences with U.S. Treasury Department officials on Monday, Japan's Nikkei newspaper reported, citing unnamed sources.
Tokyo urged the Americans to hammer out a deal to increase the debt ceiling or risk a default that could plunge financial markets into turmoil, the newspaper said on Tuesday.
Finance Minister Taro Aso on Tuesday said it was necessary to bear in mind the threat that the fiscal standoff posed to the value of U.S. bonds.
Similarly, Chinese Vice Finance Minister Zhu Guangyao said on Monday that Beijing had been in touch with Washington over the standoff, in which House Republicans have refused to increase the debt ceiling as they seek changes in President Barack Obama's signature healthcare law.
The standoff is in its second week, with much of the U.S. federal government closed and no signs of a breakthrough, although some glimmers of hope emerged on Monday as Obama said he would accept a short-term increase in the nation's borrowing authority to avoid a default.
The world's biggest debtor and creditors are caught in a delicate balance that neither wants to disturb. As at July 31, China held $1.28 trillion in U.S. Treasury bonds and Japan held $1.14 trillion, according to Treasury Department data.

The last big confrontation over the debt ceiling, in August 2011, ended with an 11th-hour agreement under pressure from shaken markets and warnings of an economic catastrophe if a default were allowed to happen.

Source: Reuters

Asia-Pacific community key to China's foreign policy

In his latest trip to Southeast Asia, Chinese President Xi Jinping reiterated the value the country places on the Asia-Pacific region.

In his first Southeast Asia tour since he took presidency, Xi visited Indonesia and Malaysia and attended the Asia-Pacific Economic Cooperation (APEC) informal economic leaders' meeting from Oct. 2 to 8.

During the visit, Xi said China wants to build closer ties and a community of common destiny with members of the Association of Southeast Asian Nations (ASEAN), and called for building a beautiful Asia-Pacific region through joint efforts.

China's emphasis on the Asia-Pacific region conforms to its foreign policy and shows a vision for the region, which has increasing importance on the international stage.

China has long pursued a comprehensive foreign policy, viewing great powers as the key to its foreign policy, its periphery is principal, the developing countries as the foundation, and multilateral diplomacy as an important arena.

As an East Asian country sitting on the west edge of the Pacific, China has had historical connections with Asia-Pacific countries for hundreds of years and has maintained close economic and political ties in the region.

China's rapid economic development and revival require a stable and peaceful regional environment, and properly handling of ties with Asia-Pacific countries, especially with neighboring countries, will be a challenge for China.

Despite the general trend of peace and development, some discord has emerged. China-Japan ties have soured in recent years as Japan has infringed on China's sovereign rights on the Diaoyu Islands, while some other countries have made disputes over territorial and maritime rights with China.

In such circumstances, wisdom is needed for China to safeguard its rights while at the same time maintain sound relations with Asia-Pacific countries, including ASEAN members.

Xi's remarks during his tour gave a solution to this mission: a community of common destiny and multilateral platforms like APEC can tie China, ASEAN and other Asia-Pacific countries together to avoid trade-offs of their rights and powers.

The Chinese president's Southeast Asia tour and attendance at the APEC meeting came as the role of the region grows on the global stage. The Asia-Pacific region is now the most economically vigorous area in the world, and APEC members include the world's top three economies and major emerging markets. Its estimated GDP growth rate stands at 4.3 percent, almost 3 percentage points higher than other areas on average.

The Asia-Pacific region's contribution to world economic development is increasing, and it will contribute more through cooperation. A greater role for China in the Asia-Pacific region can promote deeper cooperation in the area and maintain a peaceful, stable and development-oriented region.

Source: Xinhua

A Decade of China-Asean Strategic Partnership

Interview to Chinese Premier Li Keqiang.

What tangible benefits has this 10 years of China-ASEAN strategic partnership brought to the two sides?
Over the past decade, China and ASEAN have advanced practical cooperation and set up the world's largest free trade area among developing countries. China is now ASEAN's biggest trading partner and ASEAN China's third largest trading partner. Last year, two-way trade exceeded US$400 billion, five times that of ten years ago; mutual investment totaled over US$100 billion, three times that of ten years ago. Over the past decade, China and ASEAN have increased people-to-people and cultural exchanges. Exchange of visits reached 15 million last year, four times that of ten years ago. China has become ASEAN's second largest source of tourists, and over 1,000 flights shuttle between the two sides every week. Over the past decade, China and ASEAN have stood side by side in times of adversity. On the basis of successfully fending off the Asian financial crisis, the two sides properly responded to the international financial crisis, and helped each other in tackling such major natural disasters and epidemics as the Indian Ocean tsunamis, the SARS epidemic and earthquakes.

We need to build on the achievements of the "golden decade", explore new strategic breakthroughs, and jointly build a closer China-ASEAN community of common destiny. 

I believe we need to focus our efforts in the following areas:

First, we need to remain committed to building good-neighborly relations. China is ready to actively discuss with ASEAN countries the signing of a treaty on good-neighborliness, friendship and cooperation to consolidate the political foundation for our strategic mutual trust.

Second, we need to strengthen exchange and cooperation in the security field. We need to improve the mechanism of ASEAN-China defense ministers' meeting and deepen cooperation in disaster prevention and relief, cyber security, combating transnational crimes, joint law enforcement and other non-traditional security fields.

Third, we need to build an "upgraded version" of the China-ASEAN FTA. We need to take concrete steps in trade in goods, trade in services, investment cooperation and other areas to promote trade and investment liberalization and facilitation and achieve the goal of one trillion US dollars of two-way trade by 2020.

Fourth, we need to push forward connectivity and step up the linkage between "software" and "hardware". China proposes to establish an Asian infrastructure investment bank and meet, on a priority basis, some ASEAN countries' need for financial support in infrastructure building.

Fifth, we need to strengthen financial cooperation to jointly guard against new risks. We need to increase the size and scope of bilateral currency swap, expand the pilot program of settling cross-border trade with local currencies and enhance cooperation on the Chiang Mai Initiative Multilateralization.

Sixth, we need to build a maritime cooperation partnership, intensify practical cooperation on marine economy, especially fishery, and in other areas such as maritime connectivity, marine environment protection and scientific research, and maritime search and rescue, and work together to build the Maritime Silk Road of the 21st century.

Seventh, we need to boost cultural exchanges. The two sides should jointly formulate the China-ASEAN Cultural Cooperation Action Plan to facilitate exchanges in culture and education, and between youth, think tanks and the media.

Source: Xinhua

China's PM Xi Jinping: Asia-Pacific to stay as world economic engine for growth

Chinese President Xi Jinping's Southeast Asia trip and his presence at an Asia-Pacific Economic Cooperation (APEC) meeting will help the region continue serving as an engine for world economic growth, a senior Chinese official said on Tuesday. Chinese Foreign Minister Wang Yi told reporters on Tuesday that while attending the two-day APEC economic leaders' meeting, Xi proposed that regional members increase the openness of their economies, and promote policy coordination, common development and the integration of interests in the area. Under the theme "Resilient Asia-Pacific, Engine of Global Growth," this year's APEC gathering started on Monday on the Indonesia's resort island of Bali. APEC is considered a premier economic forum in the Asia-Pacific region that was established in 1989. It has been committed to dismantling trade barriers while nurturing closer economic ties. The organization now has 21 members across the region, accounting for approximately 55 percent of global gross domestic product (GDP) and 44 percent of global trade, according to data provided on its official website. At the meeting, Xi called on all regional members to further their economic restructuring, oppose trade protectionism, and boost cross-Pacific inter-connectivity. Yang considered these proposals important for the region to handle current challenges, and draw up plans for the future. In Bali, the Chinese leader also urged regional economies to coordinate their free trade arrangements in the spirit of openness, inclusiveness, cooperation and all-win, said Yang. While addressing the APEC meeting on Monday, Xi warned against a world trade regime fragmented by various free trade arrangements, and called for determination to conclude the long-stalled Doha Round of global trade talks. He also noted that while the international community are working to push forward the Doha Round, various free trade arrangements in the Asia-Pacific are advancing in parallel, each with different rules, standards and preferred pathway. China believes that "any arrangement should lead to a cooperative relationship, not a confrontational one, an open mindset, not an exclusive one, win-win results, not a zero-sum outcome, and integration, not fragmentation," he said. The Chinese president also turned his trip into a platform on which he explained to leaders of other regional partners why China's economic growth rates are slowing down, and expressed his full confidence in the future development of the Chinese economy, said the foreign minister. In his speech to an APEC CEO summit on Monday, the Chinese president stressed that the slowdown is an intended result of China's economic restructuring. "I am confident because first of all China's growth rate is within the reasonable and expected range," said Xi, adding that "everything has been going as expected and nothing has come as surprise." China is working to move away from over-reliance on investment and export, and trying to stimulate domestic demand to boost growth. It, instead of taking GDP growth as the sole criterion for success, is now focusing more on improving the quality and efficiency of growth. Meanwhile, Xi also reassured regional members that what China will bring to Asia and the world is opportunities for development, not threats. "China has achieved its own development, and at the same time, China's development has also contributed to regional economic growth," said Xi in his APEC CEO Summit speech. Yang said that Xi's Southeast Asia trip has played a key role in promoting a favorable and stable neighboring environment for China. He noted that it is Xi's fourth overseas visit since the beginning of this year, which, together with previous tours, has already taken the Chinese leader to Asia, Europe, Latin America and North America. Source: Xinhua

Japan to consider taxing online sales of overseas companies

Chief Cabinet Secretary Yoshihide Suga said Tuesday that the Japanese government will start talks on imposing the consumption tax on overseas companies that sell goods online in Japan.

The levy on the foreign online retailers is expected to start simultaneously with the consumption tax rate hike to 8 pct from the current 5 pct scheduled for April next year.

Online sales in Japan by overseas firms are currently not subject to the consumption tax because it is imposed only on firms with their head offices located in Japan.

Source: NewsOnJapan

OECD:Japan tops reading and maths skills

Japanese adults are farther ahead in maths and literacy skills than their peers in 23 other countries, according to a report by the Organisation for Economic Co-operation and Development (OECD) published Tuesday.

The study, conducted in 22 OECD member states as well as Russia and Cyprus, involved tests on 166,000 people aged between 16 and 65.

Only 4.9 per cent of Japanese adults had scores of one or less on a scale of 1 to 5, indicating difficulty in reading a simple text.

The highest level 5 denotes the ability to search and process information from dense texts and evaluate evidence based arguments.

'Roughly every fifth Finn and Japanese reads at high levels (Level 4 or 5 on the Survey of Adult Skills),' the OECD Skills Outlook 2013 report said.

'This means, for example, that they can perform multiple-step operations to integrate, interpret, or synthesise information,' it said.

The corresponding figure was less than one per 20 for Spain and Italy. The OECD average was 15.5 per cent.

Japanese nationals aged between 25 and 34 who had only finished secondary education were further ahead in writing skills than university graduates in the same age bracket in Spain and in Italy, the report said.

The results were similar for mathematical ability with the Japanese outstripping the others. Only 8.1 per cent had problems in tackling a basic sum and were evaluated at level 1 or less.

Source: NewsOnJapan

China advocates direct talks of South China Sea countries

China said on Monday that the involvement of countries outside the South China Sea region on the maritime disputes will only complicate the situation.

"The involvement of countries outside the region on the South China Sea issue is more out of political purposes," said Liu Zhenmin, vice foreign minister, at a press briefing.

"This is not conducive to the increase of mutual trust and consensus among countries in the region, but only complicates the situation, "Liu said.

He said China advocates and supports that countries to discuss the South China Sea issue on the China-ASEAN leaders' meeting as this is an issue within the region.

"However, we have always been against the discussion of the issue on the East Asian Summit, and we do not hope the issue becomes a focus in the meeting," Liu said.

According to the consensus reached between China and the ASEAN members on the South China Sea issue, all disputes related to the South China Sea should be solved by claimant countries through dialogue and negotiation, said Liu.

Besides, China and the ASEAN should conduct cooperation on safeguarding peace and stability of the South China Sea and ensuring the freedom of the navigation and the security in the region, he added.

The vice foreign minister said China has maintained a smooth channel of communication and consultation with countries directly involved in the South China Sea disputes.

China has the confidence that it can solve the disputes with countries concerned via friendly negotiation so as to make the sea "a sea of peace and cooperation," said Liu.

Source: Xinhua

IMF's Latest report:Global Growth Patterns Shifting, Says IMF World Economic Outlook report

"Global growth is still in low gear and the drivers of growth are shifting, says the IMF’s latest World Economic Outlook (WEO) report. The IMF forecasts global growth to average 2.9 percent in 2013—below the 3.2 percent recorded in 2012—and to rise to 3.6 percent in 2014".

"Growth is expected to be driven by advanced economies. Growth in major emerging markets, although still strong, is expected to be weaker than the IMF forecast in its  July WEO 2013 update. This is partly due to a natural cooling in growth following the stimulus-driven surge in activity after the Great Recession. Structural bottlenecks in infrastructure, labor markets, and investment have also contributed to slowdown in many emerging markets.

“This transition is leading to tensions, with emerging market economies facing both the challenge of slowing growth and changing global financial conditions,” said Olivier Blanchard, the IMF’s chief economist and head of the Research Department.

These growth transitions, combined with an approaching turning point in U.S. monetary policy, have led to new challenges and risks. In particular, long-term interest rates in the United States and many other economies have increased more than expected. Although the U.S. Federal Reserve recently decided to not slow the pace of its asset purchases yet and capital outflows from emerging markets have subsided somewhat, bond yields remain well above levels of early May. And there is a distinct risk that financial conditions will tighten from their current, still supportive levels.

In the United States, the projections are based on the key assumption that the ongoing shutdown in the federal government will be short-lived and the debt ceiling will be raised on time. Growth is expected to rise from 1½ percent this year to 2½ percent in 2014 driven by continued strength in private demand, a recovering housing market and a rising household wealth.

 In the euro area, policy actions in general, have  stabilized financial conditions, although growth in the periphery is still constrained by credit bottlenecks. The region is expected to gradually pull out of recession, with growth reaching 1 percent in 2014.

In Japan, fiscal stimulus and monetary easing under the authorities’ new policy package has enabled an impressive rebound in activity. But the expected unwinding of fiscal stimulus and reconstruction spending together with consumption tax hikes will lower growth from 2 percent this year to 1¼ percent in 2014.

In China, growth is projected to decelerate slightly from 7½ percent this year to 7¼ percent in 2014. Policymakers have refrained from stimulating activity amid concerns for financial stability and the need to support a more balanced and sustainable growth path.

Overall, growth in emerging market and developing economies is expected to remain strong at 4½–5 percent in 2013–14, supported by solid domestic demand, recovering exports, and supportive fiscal, monetary and financial conditions". 

 October 8, 2013.

 By Rupa Duttagupta and Thomas Helbling 

       IMF Research Department

Obama to nominate Janet Yellen to head Federal Reserve

US President Barack Obama will nominate Federal Reserve Vice-Chair Janet Yellen to be the next head of the US central bank on Wednesday, according to a White House official.

If confirmed by the US Senate, Ms Yellen would replace Ben Bernanke, who has held the post for eight years.

She has been his deputy for the last two years, and would become the first woman to head the Federal Reserve.

She has taught at Harvard University and the London School of Economics, as well as holding a series of senior administrative positions in the US.

Ms Yellen, like Mr Bernanke, is seen as a 'dove', meaning she prefers to prioritise boosting employment by keeping rates low rather than worrying about inflation.

Her nomination has been widely expected after former Treasury Secretary, Larry Summers withdrew his candidature.

Source: Reuters

U.S. Bitter political gridlock continues

"At a news conference, an unbending Obama said he would not hold talks on ways to end the fiscal impasse while under threat from conservative Republicans, but agreed to discuss anything, including his healthcare plan, if they restore government funding and raise the debt limit.

"If reasonable Republicans want to talk about these things again, I'm ready to head up to the Hill and try," Obama told reporters.

"But I'm not gonna do it until the more extreme parts of the Republican Party stop forcing (House Speaker) John Boehner to issue threats about our economy. We can't make extortion routine as part of our democracy."

Obama's comments followed an earlier phone call to Boehner, who had adopted a slightly more conciliatory tone in comments to reporters after a meeting with House of Representatives' Republicans.

Boehner had said there were "no boundaries" in potential talks, and made no mention of recent Republican demands to delay parts of Obama's healthcare law in return for approving funds to end the government shutdown.

But speaking to reporters after Obama's news conference, Boehner said he was "disappointed" by the president's approach.

"What the president said today was 'if there is unconditional surrender by Republicans, he'll sit down and talk to us.' That's not the way our government works," Boehner said.

The public give-and-take between Obama and Boehner was the most direct exchange between the two leaders since a White House meeting last week, but neither side has come up with a path to resolving the bitter fiscal stalemate".

Source: Reuters

IMF Global Prospects and Policies

Global growth is still weak, its underlying dynamics are changing, and the risks to the forecast remain
to the downside,markets are increasingly convinced that U.S. monetary policy is reaching a turning point, and this has led to an unexpectedly large increase in long-term  yields in the United States and
many other economies,notwithstanding the Federal Reserve’s recent decision to maintain its asset purchases. This change could pose risks for emerging market economies, where activity is slowing and asset quality weakening. Careful policy implementation and clear communication on the part of the Federal Reserve will be essential.

Growth in China is slowing, which will affect many other economies, notably the commodity exporters among the emerging market and developing economies.
At the same time, a fragmented financial system in the euro area and worrisomely high public debt in all major advanced economies––remain unresolved and could trigger new crises.
The major economies must urgently adopt policies that improve their prospects; otherwise the global economy may well settle into a subdued medium-term growth trajectory.
The United States and Japan must develop and implement strong plans with concrete measures for medium-term fiscal adjustment and entitlement reform, and the euro area must develop a stronger
union block and reform and put in place a strong financial system.
  China should reform its strategy for growth, boosting local consumption and rebalance its model of growth away from exports and investment.
  Many emerging market economies need also structural reforms.