 So, I'm delighted again to be moderating the global economic outlook after what one has to agree was rather an unusual warm-up act. I am very disappointed, however, that for some reason they forgot to provide the bound, which I think we would have enjoyed very much. The previous speaker said three things with which I think we can all agree, that growth is very important, that jobs are very important, and trade needs to be free, and perceived, and I agree with this, to be fair. And I think those three points, growth, jobs, and the nature of the trading system are pretty important for our discussions now. We are meeting at a point in which I think for pretty well the first time, since January 2008, the WEF has a tendency to be a bit behind the times, so it didn't fully realize at that time just how bad it was going to be. But since so 10 years of extraordinarily global economic optimism, and about a widely shared and synchronized recovery, so we will discuss the nature of that recovery, the risks both in both directions to it, and some of the longer term opportunities and challenges it creates. To do so, if I may, introduce the panel very, very quickly, because you know I think everybody here, I have Christine Lagarde to my left. I think she's been a member of this panel for quite a long time. To her left, she's obviously the managing director of the International Monetary Fund. To her left is Mark Carney, who is to me the governor, but of course to others as is mainly the governor of the Bank of England, and the central banks have so many governors after all. To his left is Carrie Lam, who is the chief executive of Hong Kong, and to her left is Haruiko Koroda, governor of the Bank of Japan, who has actually been a friend of mine for 40 years. We met at Oxford. And to his left is Mary Callan-Erdos, whose chief executive officer of JP Morgan's asset and wealth management, whom I've met and shared panels with now on quite a few occasions, and I'm looking forward very much to this one. So let's start with the short-term economic outlook, and you've just recently at the IMF produced your update, which is wonderfully cheerful in every respect, and forecasting 3.9% growth for the world this year and next. So what could go wrong? Well let's celebrate what could go right for the moment, because we do have, we are in a sweet spot, as I've said, 3.9, 3.9, 2018, 2019, it's not bad. What I think is even more interesting is that about 120 countries, I've actually seen their growth increase last year, and we only have about one-fifth of the emerging and developing countries that are seeing their GDP on a per capita basis decline. So it's well spread out, and it's shared between advanced economies, emerging market economies, and the part of the world that I would certainly worry most about is Sub-Saharan Africa, where we have a combination of factors that lead to that lower income per capita. I think we should celebrate, we don't do that so often, and at the IMF we identify negative and downside risks in the most, but we should celebrate the policies that have been implemented by policymakers, and in particular by central bankers. I think one of the reasons we are in that sweet spot at the moment, it's a cyclical upswing, let's face it, but it's largely attributable to policies that have been implemented. Monetary accommodative policies that we had no idea about 10 years ago. Fiscal policies in many corners as well, which have been reasonably good, it's debatable what was done exactly, say, eight years ago, but in the main it's the result of good policies. What could go wrong, I'll mention three vulnerabilities as I see them. First of all, financial vulnerabilities, and while the U.S. tax reform certainly will have positive effects in the short term for the U.S. and for other countries around, it might also lead to serious risks, and we can discuss that later if you want. And that has an impact on the financial vulnerabilities, particularly given the high asset prices that we see around the world, and the easy financing that is still available. I would say that the second risk, which is short and medium term, but needs to be addressed in the short term, is the excessive inequalities that in many places are growing and creating those fractures that Klaus has identified as one of the themes of the World Economic Forum this year. And I would say that the third downside or risks that I see is the lack of international cooperation and the geopolitical risks that could be created as a result. I'll stop here, but happy to comment on any of those three. Well, these are huge points, and we will certainly come back to them. Let's turn to one of the central bankers who has produced these outcomes. Central bankers have certainly become controversial. They have been described by a well-known authority as the only game in town. And I think many of us feel that's probably truer of Japan than anywhere else. So that there were three arrows, and yours is certainly the arrow that's gone further, Mr. Koroda. So tell us about your remarkable monetary policy, its success, and how you're going to get out of it. Thank you, Martin. Let me first explain the current status of the Japanese economy. The economy is expanding moderately, supported by both domestic and external demand in a well-balanced manner. Real GDP has continued to grow for seven consecutive quarters, and the average growth rate during that period is close to 2%. Since Japan's potential growth rate at this moment is slightly less than 1%, 2% growth in the last seven quarters is really substantial improvement, and the unemployment rate has declined to less than 3%, actually 2.7%, which is even in the Japanese context is really full employment. And the current economic recovery has lasted for over 60 months, and this is the second longest boom in the post-war era. Going forward, Japan's economy is likely to continue its moderate expansion. So the virtual cycle from income to spending is expected to be maintained in both the corporate as well as household sector on the back of highly accommodative financial conditions. On the price front, the annual consumer price inflation excluding fresh food has been approaching 1%, but has remained slightly positive, excluding the effect of energy prices. In Japan, a contrast between strong economic recovery and relatively weak prices stand out as much as or even more than in the U.S. and Europe. However, we think that with the output gap further improving and labor market conditions steadily tightening, firms' price setting stance is expected to become gradually bullish and medium to long-term inflation expectations are projected to rise. So while consumer price inflation is likely to increase towards the price stability target of 2%, the deflationary mindset entrenched among people under prolonged deflation has been more tenacious than expected. Therefore, the Bank of Japan will continue to support Japan's economy and prices by pursuing powerful monetary easing with persistence under the so-called quantitative and qualitative monetary easing with yield curve control. There are various risks in the short to medium term, but from my perspective, they are mostly external, including some geopolitical risks. Can I just follow up on one question because it's one that is more generally discussed and it's an issue that you face in a way Mark Coney doesn't. So here you have an economy that is growing significantly above trend for a length, quite an extended period. You have unemployment at 2.7%, which is clearly very low and falling, and you announced when you became the government and the Bank of Japan together that you would hit an inflation target of 2%, which didn't seem, most people would say, if the economy was like this, you would have got there. So why is there no inflation? What do you think is going on and how does that fit with what we're seeing in many other areas like Eurozone and the United States as well? I think there are two factors behind rather slow response of prices and wages to strong economic growth. One is sort of universal common factor like globalization, new technologies, even Amazon effect and so on and so forth. All of them may make inflation rather subdued. This is universal factor. But second, Japan-specific factor is, as I just said in my initial remark, that is to say after 15-year-long deflation from 1998 through 2013, deflationary mindset, people expect the prices and wages do not rise. And this kind of mindset is rather strong and it's not so easy to eradicate this kind of mindset from Japanese household as well as companies. But there are some indications that wages are actually rising and some prices have already started to rise. And even the medium to long-term inflation expectations, which have been so weak in the last couple of years, are now slightly picking up. So there are many factors which made achieving 2% inflation target or price stability target so difficult and time-consuming. But I think we are finally close to the target. Okay. We hope so. You promised the government that you would deliver it. Mark Carney, you don't have the problem of low inflation at the moment. You do have the problem of managing monetary policy in the face of some strange decision that British people, God bless them, took in June 2016, one which probably those who have ever read me will realize I wasn't wildly enthusiastic about. You have started a tiny increase in interest rates, a step towards normalization. How do you perceive the monetary policy challenges for you and other central banks in similar situations ahead in this strange environment of strong growth but still generally contained inflation and where among the other things people are concerned about is that this normalization process might reveal more financial fragility than is now evident. So what is the path forward? In the next, what, 15 minutes should I answer that? You can do it in two minutes. To do it in two minutes, let me generalize and talk about the overall normalization challenge if I could. And if I could pick up on some of what we just heard, the nature of the expansion, the recovery as the IMF has just indicated, it's stronger, it's getting up to around 4%. It's broader, it's 90% of economy is growing faster than potential, so slack is being used up. And it's also healthier. I'll give you one example. In terms of the acceleration of G7 growth in the last year, 80%, 80% plus of that has been investment picking up and net trade picking up. So this is not a consumer boom led recovery, this acceleration. And all of those have consequences for normalization as you can anticipate. So the first slack being used up is the Phillips curve coming back. That's the question. In the face of bigger secular pressures, globalization technology as Crota San just mentioned, and all of us have been discussing over the course of this week and at other times. I think the crucial point is as you get towards full employment, as the output gap shifts, they call it a Phillips curve for a reason. And you start to see the convex element of the slope. So the pickup should be there or should begin, maybe not quite to historic degrees. So we have to be cautious, but should come. And if you look at wage behavior in the US, in the UK, some of the well, maybe I shouldn't speak for other economies, but you see that firming of wages, which once you adjust for poor productivity growth and some under employment, and up until very recently, a relatively low level of churn in the labor market, it starts to fit together at least directionally. So there's that aspect which is pushing up. The second element on pushing towards normalization, I should say, of policy. The second element is that healthier bit, more investment as part of the recovery. So investment picking up relative to savings. And we've seen, as you know, a big shift in fiscal policy. Think on average advanced economies, about a two, two and a half percent drag from fiscal policy, 2010, 2014, now adding, depending on how you use multipliers, particularly for the US, but adding to growth, maybe half a percent or so on average across the G7, somewhere in that zone. But that's a big, big swing. So investment up, savings down, pushing up on the equilibrium rate of interest. The third element of that I'd highlight is just the stance of policy as a whole of, if I could use the term for these purposes, the G4. So the members of the G7 who were practicing quantitative easing, and if you look at the flow of net fiscal issuance minus what the bonds being taken out of the market by asset purchases, whether it was the BOJ or the ECB or the Bank of England or the Fed, we've shifted from, collectively, 2013 to 2017, basically no net flow or even bonds being taken out on net to this year on the order of magnitude of about a trillion dollars of net issuance based on announced plans and potentially that going up to a trillion five or higher next year. So that one would expect to push up on rates. So in the context of normalization, you have sort of real economy providing some support for it. You have some technical factors which play into it. You have a very tough judgment to be made around where is the equilibrium rate of interest, which has been very, very low and arguably should be raising a bit. You can make a judgment about direction, but probably not, certainly not with any precision about degree. And so that's going to require one has a sense of direction, I would say, as a whole for the central banks, a regime shift in terms of towards normalization, but a requirement for each of us to be quite prudent and patient as appropriate in making those judgments. Last thing I will say, and I'm not going to expand on unless you want, I mean, the UK is in a relatively unique situation in that over the course of the next year, as the negotiations with the EU 27 progress, we're going to find a lot more about what the supply capacity of the economy is in the near term, what the right level of the exchange rate should be, whether or not there are going to be tariff or other trade costs, and how all of this affects demand. And of course, it is all of those factors together, which determine the appropriate stance of monetary policy. Let me ask one follow up question, because before go to the I was trying to run out the clock. Yeah, I'll come back to that in a moment. You have had a central role through the Financial Stability Board in strengthening the global financial system. I get, you know, every time I write on this sort of hundreds and hundreds of comments below on the lines of these crazy central banks have already, and if they haven't already will soon have created the most unmanageable asset price bubble ever, the Omni bubble. It will burst probably when you, as and when you raise the rate, you collectively, and the crash will lead to total meltdown of, this sort of thing. On a scale of one to 10, how likely is that? Which way? You can choose. One zero risk, essentially, go ahead, all of you people, go away and not worry at all, and 10, run away and get a big umbrella because the house is going to fall down on you. I have two points. It's a composite probability. What's the probability there'll be an adjustment in asset prices? Yeah, that probability has gone up. If you look at corporate bond spreads, high yield spreads, they're at near all-time lows. Last seen, you know, just before LTCM, just before the global financial crisis in a rising rate environment, if indeed that is the right stance of policy, one would expect some adjustment there, other asset prices accordingly. I think a big question is not, you know, the market will find the right level for assets. The question is whether the core of the financial system is in a position that it's going to amplify those movements in an adverse way, and there'll be a feedback to the real economy. And on that component of the probability, I would put that as quite low because it's not just the regulators, it's the financial institutions represented here and across the world that have really transformed the liquidity and capital positions of the institutions. I'll give you very quick numbers if I may. Pre-crisis, the coverage of short-term liabilities for banks, the major banks, particularly in the UK, plus their access to central bank facilities was 10%. Now it's 110%. So they're fully covered about their own liquidity and their access to our liquidity on all their short-term wholesale liabilities. That is a huge move. Second figure, and people can debate about it, and we've had healthy debates on it, but the overall level of capital standards have gone up 10 times, but the actual levels of capital have gone up about five times for the major banks, apples to apples comparison in terms of capital. That's a huge shift. And it's the type of shift in the judgment of the Bank of England, and I'll be around if this judgment is tested, that would allow that system to withstand a shock of a disorderly Brexit, which is a big call, but we're confident in terms of the orders of magnitude because we've tested it. And then the last point is we're not all the way there to end in too big to fail, but we have made a huge amount of progress in terms of reshaping and the institutions reshaping their business lines, being able to separate their high street or their retail component of their banking, and adding on top of all that capital, big layers of bail-in-able debt. For the UK, and I'll stop with this, the major banks have 25% total loss absorbing capacity. So even if they go through that capital, there's another layer of securities that are held by institutional investors, some of whom represented in this room, who would find out that they're no longer debt holders but they're equity holders. So all of that provides real shock absorbing capacity for the core of the system. That is not to say that asset prices couldn't change, but it's to provide a measure of confidence that if and when they do, even if there are sharp changes, that the system isn't going to amplify that impact. I think this is incredibly important. So the conclusion I would draw, too, one is that all those commenters, and possibly there are one or two in the audience who are just worried that the whole world will fall apart in the next couple of years, because the policy normalization and asset price collapses should calm down and feel completely and utterly relaxed. And the second conclusion, which is completely personal, that if there are any politicians in the world who are telling us that the continually rising stock market is an indication of how successful they are, they might find the central banks again and again in the way. Let me turn to you, Carrie Lam. Tell us about how the world looks from your perspective, both in Hong Kong as a core part of the Asian economy, financial center, and if you can, about the rather large place with which you're closely connected into your north. Yes. Well, as a small and externally oriented economy, but at the same time, one of the freest and most competitive economies in the world, Hong Kong certainly benefits from the global economic recovery. So we are doing very well last year. We are projecting the full year growth for 2017 at no less than 3.7% in real terms, which is considerably higher than the 2% in the preceding year, that is 2016. Christine kept on reminding us that while the sun is out, fix the roof. I'm pleased to tell you that I have not discovered a leaking roof in Hong Kong yet, but similarly while the sun is out, it's always good to strengthen the foundation. Strengthening the foundation will enable Hong Kong to seize the many opportunities available to us arising from China's economic policy and also Asia, because Asia's growth now accounts for 60% of the GDP growth worldwide, and China alone is 30% contribution. So this session is about global economic situation. I will not be doing justice if I just talk about this small economy of Hong Kong. So if one looks at the China economic policy, which will be very relevant for Hong Kong, because President Xi Jinping said in his 19th Congress report that he will support, the central government will support Hong Kong being integrated in the national development strategy. Last year, President Xi delivered two very important speeches internationally. One, of course, is in this forum at the last year's Davos in January last year, but at that time, I suspect that the global economic recovery was not very certain. So President Xi was talking about leaders in various economies should show the joint responsibility to propel the economic growth globally. And then in November last year, which Christine and I were also there at the APAC meeting, CEO Summit. At that point in time, I think everybody was very assured that there is now very bright signs of economic recovery. So President Xi talked about that we should really seize the opportunity of a global economy in transition to accelerate the growth of Asia Pacific. So putting in that context, I try to summarize for distinguished guests the gist of the economic policy of China in my view, based on my reading of the two speeches, is how China will continue to uphold free trade and economic globalization that we should adapt to it and guide it and cushion its negative impact and deliver its benefits to all. Because if economic benefits are not shared by all, all economies will face one problem or the other. And it should be more reinvigorated, more inclusive and more sustainable. So with that in mind, since the world is now seeing some driving forces for growth, I feel we should take this opportunity to improve governance, to focus on more trade rules, to have more regulatory collaboration between central bankers and regulatory authorities, to put in place some social policies to address issues that Christine has reminded us also, poverty, income disparity, and lack of opportunities particularly for the young people. So I would just like to say that in this term of a government, I will embrace those values and although we do not practice state planning under the basic law, we are still a free capitalist economy, but we will embrace those values to put in place the necessary social policies to make timely investments in education, so enhance connectivity with the rest of the world, particularly with ASEAN. So last November we signed an FTA with ASEAN and we are negotiating several free trade agreements at this moment. So I remain very optimistic about the short to medium term future of Hong Kong, but as I said, since we are so externally oriented, please keep those tsunami away from us and then we will be safe. Thank you. May I, this is difficult, but I don't think we can avoid it. Just to ask one follow-up question and I'm going to also discuss this with Mary. President Trump, when he spoke here, I think the most substantive thing I think for this audience and this panel is what he said about trade policy and he said two quite interesting things, one of which was new and we'll come to that in a moment and one more traditional. He talked very explicitly and it's not new about countries, though he didn't name names, which are perceived to misbehave on intellectual property and countries that are pursuing industrial policies with government subsidies. I think he used that word and it's surely no great secret that when he says that he's thinking about China and there are those of us who are very concerned at the risk of serious trade conflict and we have of course at the beginning of this week seen relatively minor actions in this regard. From your perspective as running a very open economy, great trading place connected to China and of course to the US too, how concerned are people where you are that this actually might prove a very destructive development? How do you perceive that risk? Well of course as I mentioned being such an externally oriented economy and so dependent on free trade, we would not like to see any trade conflicts or trade wars so to speak, but trade deficit is not something that we are not used to. I remember at a session that I shared with President Trump at APAC, I gave him a figure, I said Mr President, the largest trade surplus that America has is with this small economy called Hong Kong at 31 billion US dollars a year and he seemed to be quite pleased with that and you didn't threaten him with protection? He did not mention his way, he did not mention his way just now so coming back to China as I mentioned from President Xi's discussions in the two speeches China is still a developing economy so it will evolve and build in those things that will make trade more transparent, fairer to everybody, but the fairness must be to everybody. If I may turn to you, Maria Does, I'm very much interested to see whether there's anything in the sort of overall picture of the world that has been presented by these very distinguished representatives of the official sector you disagree with and I would be particularly interested in your perspective from where you are on the impact of the tax reform which is obviously a very big issue and possibly on financial fragility as a representative, very very leading representative of the private financial sector. You know I can't help but sit here and we're all in this audience this is the last panel of the 2018 Davos event and when we think about where we've come from and what we just heard from all the major economies around the world I think we first and foremost have to thank Mr. and Mrs. Schwab for bringing us together to be committed to improving the state of the world because the vision to bring together not just policymakers in one area and central bankers and another and CEOs and another and philanthropists in another but all together to import and export the best thinking so that and especially after the great financial crisis how do we get back on a road where we don't have a boom and bust cycle and here we sit nine years later we could be in our second recession post then had we had the regular ups and downs and we have a global economy that is expanding almost universally and it is because you look at the people up here on stage and the other central bankers and policymakers around the world and you think to yourself how incredibly complicated this was to pull off nine years 11 trillion dollars put back into the system but not in an in an unthought through manner so that we are sitting here and we have these people who have worked tires tirelessly it is so incredibly complicated to have gotten this right and what you've done for all of us especially the investors of the world to be able to invest in that on behalf of all the pensioners around the world who will benefit from that as they move towards their retirement I cannot thank you enough for that and I can't also not thank you enough for giving all of these government jobs such a fabulous prestige and something that I know all of us now perhaps aspire to do even more so than in the past and we thank you for that well thank you fantastic thank you that's the nicest thing I've ever heard said about central bank so thank you all for coming Mark um well the all the official sector should feel extraordinarily happy I'm waiting for the but there is no but the the the and and therefore it is incumbent on us as investors to watch what they're doing and to not miss a beat and not sit here and think about the greatest worry in Davos that I've heard for the past several days is that there's not enough worry people are worried that people aren't worried and it's okay to not be worried it's okay as madam Lagarde said to celebrate where we are how we got here and to not miss a beat on investing so that people can benefit from that so that all the people around the world who can have access to public markets can be able to participate in the recovery of what has happened and to continue to do so and so the the opportunities we can talk about them in the US but they're really almost everywhere US Europe emerging economies being able to have participation in these companies taking these policies and putting them back to work and reinvesting in their own communities and in their own products and services is exactly what our job is to do. Do you want to say anything about the great tax cut and how it's going to impact the US and the world? You know the great tax cut is really the great tax normalization the US was just out of whack and so the fact that we got it done was a was a very important move for the US competitive nature. How that goes back into play I think is the thing that's so exciting for the rest of the world because what happens in the US can often be contagious for other companies that exist in a multinational fashion or just in their in their own nations and so the fact that the CEOs in the United States of America are not just doing one thing with those tax cuts but doing multiple things they're taking that money and they're helping the shareholders you see more buybacks you see more dividend payments they're helping the customers of the companies you will see much more M&A to get better products and services you see much more capex and then very importantly they're helping their employees so it's not just the one-time bonuses that we've heard about it is wage increases it is health care support it is being able to help them and and increase their retirement benefits so it's being able to help them to continue to participate that and then additionally companies are also taking that money and putting it back into their own philanthropic efforts in the communities that they serve in the job retraining and so if you can continue to see that across America that is what capitalism is all about I'm going to move on now to and if somebody wants to add on the shorter term risks to the longer term opportunity I think the IMF was the first to say we should fix our roofs while the sun shines I think it's as the the fund has been rather good on metaphors of various things of this kind in the in the last a few years so I like that and it's no longer the new mediocre which is nice so the big issue people are focused on is the feeble state of productivity growth some people seem to think tax cuts will be enough but what is what is your view Christine Lagarde of the of the agenda of fixing the roof in particular to to make sure the cyclical recovery and if clearly is a cyclical recovery will be turned into an uptick in trend growth across the world thank you Martin a couple of things that I would like to point out to one is the productivity numbers that we have are not satisfactory productivity prior to the financial crisis was about one percent which was not particularly high it's now down to 0.3 percent in the advanced economies so that needs to be addressed second point is the potential growth needs to be improved as well because while we are in a sweet spot at the moment it's not going to last forever and clearly many of the economies that are growing nicely at the moment are growing above potential which in and of itself presents risks so growth potential enhancing reforms which are going to be country specific I'm not going to give you a laundry list because it's going to be country specific each country has a roof of its of its own need to focus on those two aspects if I can just focus on productivity for a second and that will touch on something which I mentioned earlier on as one of the downside risk which is lack of international cooperation to address productivity or the lagging productivity that we have we need to invest in research development and facilitate innovation no question about that we need more trade rather than less trade because trade encourages competition fosters innovation and actually is conducive to that improved productivity and that takes me back to my concern about lack of international cooperation to have more trade better trade fair trade free trade reciprocal trade we need international cooperation and the concern I have at the moment is that we tend to see a degree of common denominator which is yes we all need that but it needs a reset we need to look at state-owned enterprise subsidies we need to look at sharing of intellectual property rights we need to look at constraints imposed here and there yes and the IMF agrees with all that but it needs to be looked at in a cooperative way and through international cooperation I think that should happen I was particularly pleased to hear that president mentioned WTO it's one of the forum in which those things can and should happen and hopefully through improvement there innovation that we've heard many of the leaders in the last few days focus on and identify as one of the areas where they want to invest we will improve that productivity final say while Mary I want to thank you so much for recognizing the efforts that we've we've we've endeavored I don't think that we've completed the job having growth is good improving productivity is good but making sure that the results of that growth are properly allocated are properly distributed and that the growing inequalities that we see in advanced economies many of them and stabilized but still very high in emerging market economies are a threat to sustainable growth I mean we've done multiple research on that I can't imagine why but we don't seem to have any real professional politicians on these panels so they can't respond can I just want one tiny follow-up I was very interested in this came up yesterday already but President Trump repeated it just now he said if I understand him correctly then under the right terms the United States would consider negotiating to re-enter the TPP as a multilateral endeavor I think that's the first time I've heard this so these are you would have to regard that in terms of the trade agenda we've been hearing so much about that's really rather remarkable and encouraging development wouldn't we yes I think I think I think we I think I agree with you I'm not sure it's multilateral in essence it's plurilateral rather but you know better can be the enemy or the best is the enemy of the good that that's I think that's a really good indication one one more area if I may on where international cooperation is also key and I think favored by many countries including the United States actually it's the fight against corruption we haven't talked much about it and I don't want to spend too much time on it but it's one area which combined with the fight against tax evasion and profit shifting and all the rest of it is actually vital to give more hope and encourage our economies Mark honey you I think wanted to say something on this yeah and I'll you want to speak structural so I'll try to concentrate there but I'll start with a cyclical point which is that we should be seeing a pickup in productivity as you can appreciate in particular as with capital deepening but another factor in the cyclical sense which leads to structural is that we have had up until very recently quite low job churn certainly in the United Kingdom and part of the diffusion process of new innovations in their application is people moving from learning at one firm and moving to a new firm or setting up a new company and so we should get that in particularly at a time of great innovation that's where you get the productivity pickup and as you as you're well aware and you've written on this we have a very long tail in most of our economies of quite substandard firms and I think that's one of the elements of it it then goes to sort of structural policies around and I know it's motherhood to say training but the elements that facilitate people to move set up new firms last point on structural which is around trade as people think I mean entirely agree with Christine's emphasis there and also the emphasis of sharing the gains of trade and one of the things I would suggest there could be some more thought given is the nature of the trade deals how they can immediately provide a dividend because it's the nature of the companies that benefit people have put on in this for over the recent years free trade for SMEs being an objective actually we've got the the network effects and the financing ability to change that all of a sudden that's a element of globalization that works for all brings productivity and brings instant diffusion but also trade for trade in services when you think about having a positive set of discussions around trade the lagged liberalization of services where most of our populations work it's not all tradeable I know but most of our populations work trying to bring that up to the level of liberalization that has been accomplished on goods at least directionally has that that bigger impact or has the potential to have that bigger impact anyone else want to add something on the structural before we move on thank you in the Japanese context the most significant challenge faced by the economy is demographic change working a working age population in Japan is shrinking every year by half a million to one million so since the economy is growing by two percent or so well above the gross potential not just unemployment rate has declined to two point seven percent but really significant labor shortage is is developing in almost every sector of the economy and now the non-manufacturing sector which was compared with the US non-manufacturing sector less efficient is now investing heavily in high-tech labor-saving technology and investment and also robotics and AI IoT or whatever in Japan because of absolute labor shortage not just business but also workers and trade union they are in favor of those new technologies and and labor-saving investment being made and that is really improving labor productivity significantly particularly in the non-manufacturing sector so in some sense this makes prices to respond rather slowly to the very strong economic growth but in the long run this improvement of labor productivity and gross potential would make the economy sustain relatively high gross in coming years with hopefully price stability target of two percent being achieved. Can I turn quickly and then because we're going to have to have time for at least three questions as I always say Mark Carney if I can ask you a risk we haven't discussed which is interested you a lot and I think others here which is that the private sector and I want to talk ask Marietta about this again very very briefly the the internalization of what I think you call the tragedy you call the tragedy of the horizon namely climate change and which most of the world still thinks is a big problem and and how do you think we're getting at is the private sector people here beginning to have some recognition that this has significant business implications. Short answer yes and I think and to make it tangible let me use one example which is the task force on climate financial disclosures which is something that was set up at the request of the G20 leaders it was run by the private sector chaired by Mike Bloomberg and the bottom line with the summit of President Macron in December the middle of December I'll just give you some numbers of the investor numbers that have signed up to this and with an expectation the climate disclosure is going to improve for those who they invest and whom they land the top 20 globally systemic banks eight of the 10 world's largest asset managers the major solvent wealth funds largest pension funds and the two major shareholder proxy firms Glass Lewis and ISS all signed up the radiant agencies the big four accounting firms etc 80 trillion eight zero 80 trillion dollars of balance sheet with an expectation that working with the users of capital we're going to get into a much better place in terms of the disclosure not just of static risk but of strategy and governance of those risks and hugely importantly the opportunities as well over time so that together whether you're a skeptic or a true believer a believer in technology or a denier we need a market in the transition to a lower carbon future and now the private sector and I salute the private sector on this because they were passed the baton by the the public sector and they're delivering and now the question is implementation and improvement Marius is that something you'd like to add very quickly so so exactly what Marx just said at the end I think is one of the most important things for the private sector you it doesn't matter whether you believe in climate change or not because while you could have a majority of this audience understanding and believing in the issues not it's not universally felt and therefore the investors of the world have to figure out how to do that it's about the prevention of what happens when you have all these things that are happening in the world that must be addressed irrespective of what you believe in so if you look at a city like Amsterdam its infrastructure is set to protect itself for a one in ten thousand year chance event new york city a one in 100 year and the problem is we keep having these one in 500 year events in the united states of america if you look at hurricane Katrina it costs the government 120 billion dollars to fix something that had 10 million dollars 10 million been spent by the army corps of engineers to figure out that there was 10 feet of wall that should have been expanded and built underneath we could have saved the 120 billion so you have to invest in infrastructure to protect yourself for things in the future i think what we're going to see from the u.s. government is the next phase of big investments in infrastructure asking for public private partnership and i think that's the next exciting wave of what's to come thank you that's very encouraging and it's certainly true that the dutch do really understand the danger of water so i'm going to take three questions they must be one sentence i'm very bad on timing say you are and you can address it to one person i probably won't be able to give more than one person opportunity to answer anyway does anybody want to ask is somebody right there yes please stand up and say who you are julio strada minister of finance of Guatemala just a question the productivity that's been growing down over the last 10 years isn't there an element of that the speed of urbanization has also slowed down and the social license needed for infrastructure projects has become much more complicated so that it's all an element it's not just innovation it's not just business productivity but social productivity and the capacity to agree on doing things which has slowed their capacity and speeds productivity but you said slowing urbanization is that what you said yes in developed economies yes it slowed down and the process i understand anybody else want to ask a question is there a woman here somewhere that i can't see ah yes i think there should be gender equality so let's go for you good afternoon juliana ferraino corrida de la sierra the world has changed do you think the the target a two percent for inflation is still realistic very good it's the two percent inflation target still realistic and okay and i apologize to all those i won't manage thank you paul sheet s and p global knowing what we know now about the lessons from the financial crisis are there any fundamental changes that you would like to see made in the macro economic policy framework is there any major things we still need to do to improve it this has the great advantage of being just the the envelope for the second question so we don't have much time so may i start with you christine legard the suggestion was made that productivity growth is slowing in part because of what some of the fundamental drivers in particularly urbanization is slowing i think that is actually very important so that we shouldn't be surprised that productivity growth is slowing emerging and developing countries on the other hand there is still a huge backlog of productivity enhancing investments they clearly can make because many of them still so relatively poor how does the imf see the balance here a bit like you just did oh have i answered the question dear still the answer no but i think i think urbanization when it comes to infrastructure projects the the lag time between the beginning of the project the financing the implementation and so on so forth that is clearly a slowing down factor i think this is not just it there's also population aging maybe not so much in the in some of the emerging market economies there is also you know delayed investment over the course of the last few years which certainly has not helped so the multiple factors that are actually affecting it but increased urbanization certainly is one of them can i just say one word of course on the two percent inflation because i think that that's really an interesting one that two percent inflation what was not decided randomly i think it was very carefully calculated on the basis of of multiple factors there are areas in the world was certainly from our perspective we consider that to arrive at an average two percent inflation targets or there about in a particular currency zone it might be actually appropriate for some of the countries in that zone to tolerate higher inflation than that two percent i'm going to ask the question about the inflation target of you governor corada since you've finally agreed it after as you said almost two decades of deflation and now it seems to be suggested by some that two percent is too low and really it should be four percent so you've got plenty of room for maneuver what is your view where you are now are you are are you actually trying to hit very hard a target that is already outdated i think two percent inflation target or price stability target there is still meaningful relevant and and useful for managing monetary policy a few points one as you may know consumer price index or whatever price indices is tend to overestimate real price development so if your inflation indicator shows one percent inflation but in reality there may be zero percent inflation so you must aim at achieving some positive inflation target rather than zero inflation second point is there continue to be some cyclical movement and when you need to implement accommodative expansionary monetary policy you have to have sort of policy room to do so and in order to do so i think you have to keep reasonable inflation target under which your policy rate would be some positive level and you can substantially reduce policy rate in case of need and so so so policy room monetary policy room is necessary third after many years of trial and experimentation almost all central banks in the developed world have adopted two percent inflation target and i think this has become a sort of global standard and and under which medium long-term exchange rate relationship between major currencies tend to be stable so all in all i think two percent inflation target or price stability target has been well established and although some economists are now arguing for higher inflation target or price level target or nominal gdb target and so on and so forth there may be a good reason to to consider but at this moment i think after 10 20 years of of experience among major central banks i think this two percent or so inflation target should better be maintained for price stability and sustainable economic growth well connie 30 seconds very quickly to the last question i think you know ben Bernanke's idea on temporary price level targeting in very clear circumstances and making it clear ex ante that that's a possibility is an interesting idea we've looked at it in the uk in the throws it's hard to do because of the quality of the data also it's tough to do in the middle of that circumstance um and obviously what ben and charlie evans previously had proposed is different than that um so it merits some consideration um in you know quiet seminars in good times it's an example of potentially fixing the roof while the sun sun shines the only point i would make if i may is i don't think the monetary policy in the macro policy tool was the mishandled element and i've been saying this now for 10 years the mishandled element was fiscal policy and we really have to go not it was used very effectively very early and it was withdrawn the stimulus was a draw much too soon and that created some very big problems now i have minus 10 seconds so i'm going to summarize our wonderful discussion in the following five unbelievably quick points one we have a wonderfully strong recovery which is certainly cyclical and we want to make structural second there is a consensus on this panel of those who are not responsible for all this uh um that the official sector has done a wonderful job in getting us here and since for this is a time to be generous i'm going to go along with that fully but of course in all other days when i write my um my columns i'm definitely not bound by that by that recognition but i think it is fair it could have been very much very much worse and in the interwar period it was three two three this is provides us with a serious opportunity to improve policy on a whole range of dimensions and uh christine legard particularly has emphasized some of the most important which include the distribution of the benefits of growth fourth the only thing to fear is the absence of fear itself well there are many other things to fear but the absence of fear always terrifies me particularly when it's in the markets um though we have been told very confidently by someone i always believe namely the governor of my own central bank that the financial sector itself is pretty strong and finally if we're thinking about fear beyond the financial sector and the possible meltdown of asset prices whatever that might do there are plenty of significant domestic political global geopolitical and joke global economic challenges um such as trade policy and beyond that we discuss climate so if anyone leaves this hall feeling the complete abstinence of fear then i suspect they're in the wrong job and in the wrong place and with that may i thank the panel for a wonderful discussion