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The Yomiuri Shimbun

By Shinji Fukukawa

The credit crunch and economic depression are causing a chain reaction around the world. In January, the International Monetary Fund had predicted global economic growth in 2009 would be 0.5 percent, but it revised the figure on March 19 to between minus 1 and minus 0.5 percent. Japan’s economy, meanwhile, is expected to contract by 5.8 percent in 2009. The global economy is in very serious condition, and the future is uncertain. However, people are gradually seeing signs of improvement in the U.S. economy.

There also are indications of economic recovery in China, although there are still long-term problems to be resolved. The question of whether China can resolve the problems it faces will have a significant impact on the world economy. In addition, people are again questioning the relationship between governments and the market. There should, of course, be discipline in the actions governments take. But although some have been quick to point out market failures as one of the causes of the financial crisis, there also have been errors in judgment on the part of governments as the crisis has deepened.

Governments therefore need to clarify what they should and should not be doing in response to the crisis, and pursue policies in a way that the market can easily understand. Governments should also undertake comprehensive measures based on fiscal, monetary and structural considerations. According to the World Trade Organization, 17 countries already have shown movements toward protectionism. If a trend that prioritizes only single countries’ national interests spreads, the world economy will face serious problems in the future. Countries need to cooperate to prevent this trend from spreading. Stabilization of the international currency regime is an important issue, including bolstering the functions of the IMF. Meanwhile, there is growing concern about the growing U.S. budget deficit. Finally, I would urge Japan to act on its international potential and carry out policies from a global perspective.

Panelists have pointed out the necessity of the government investing significant effort into improving education, developing people’s skills and nurturing the most innovative minds. The Japanese government needs to focus the world’s wisdom through cooperating with other nations. Such wisdom is imperative now. Fukukawa is chairman of the Machine Industry Memorial Foundation. He has served as administrative vice international trade and industry minister and the vice chairman of Kobe Steel Ltd.

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