Following is the gist of remarks made by Mr. Takashi Imai, Chairman, Keidanren, at a scheduled end-of-year press conference on 26 December 2001. Translation is rush and tentative, and sequence of the gist does not necessarily coincide with words delivered.
(Asked to review 2001)
Japanese economy was as bad as was in 1998: Growth rate was negative, and stock price fell. The financial services industry is as bad, with only difference being preparedness of the government. Both the government and the Bank of Japan are prepared, legally and technically, with 15 trillion yen of emergency reserves. In any case, Japanese financial institutions must increase risk reserve fund. On the yen-rate, I think that both Japanese and the U. S. governments feel confident at the current level. For business, comfortable rate depends, but sudden fluctuation is not favorable regardless of direction of the change. Even more bothering is possible rise of long-term interest rate, which could trigger capital flight from Japan. Nevertheless, considering the government moves to pass the second supplementary budget early 2002, I hope it would be enough to keep Japanese economy afloat before the U. S. economy would start picking up, to make 2002 better than 2001.
On Japanese political front, significant steps were visible. On January 6, central government agencies were transformed to the current form and increased the power of Prime Minister as planned by former Prime Minister Hashimoto. Based on this, Mr. Koizumi came to power in April, and used his full power to promote various reforms: Make government small, let business take initiatives, and let local governments help themselves. In essence, there was a paradigm shift in Japan from government-led democracy to people-led democracy. In past, Japanese people always asked help to the government, and the government was instrumental in extending hands. However, after economic stagnation lasting more than 10 years, people realized that they are the ones who are paying taxes and insurance premiums. Under continuous decline of birthrate and increase in the number of elders, Japanese people learned that today's government could not continue for long. So, Koizumi government decided to cut public investment, areas of government operations, and increased personal responsibilities including financial burden, to let people know that they are the ones who must run the country. It is perhaps with this background, Prime Minister Koizumi is able to retain 80% popularity rate. It is a reflection of changing the times to see Koizumi government retaining fiscal restraint, continue government corporation reforms, and no cabinet reshuffling while he stays in power -- the trend that would for sure to continue on in 2002. Koizumi is employing a new political technique and opening the door to new generation politics. I would give him 100% support for his doing this.
On international economy, 2002 started with the burst of IT bubble in the U. S., which led to further hit caused by the September 11th attacks and fighting terrorism in Afghanistan. President Bush is receiving 80% popular support rate, Afghan problem approaching conclusion, and the U. S. economy is expected to start recovery in the 2nd quarter 2002. With all these evidence, I am a little more optimistic of the U. S. than what is happening in Japan.