* Abe's growth target "ambitious but not impossible" -
* BOJ's mandate not affected by progress on raising
* Kuroda warns of "uncertainties" on global outlook
(Adds quotes, details)
By Leika Kihara
TOKYO, June 23 The governor of the Bank of Japan
called for bolder efforts to raise the economy's potential as
part of a G20 drive to boost long-term global growth, keeping up
pressure on the prime minister to lay out a credible growth
"Coming up with growth strategies is a key challenge for
Group of 20 members, so Japan must make further efforts on
this," Haruhiko Kuroda told a meeting of business executives on
Prime Minister Shinzo Abe's government has pledged to boost
Japan's potential growth to 2 percent from current levels of
around 0.5 percent.
Kuroda described that goal as "ambitious but not
impossible", if efforts are made to deregulate the economy and
encourage more women and foreigners to enter a shrinking working
The comments came a day before Abe is set to deliver the
latest installment of his long-term growth strategies, which
range from corporate tax cuts and public pension reforms.
The so-called "third arrow" would follow the first two
arrows of aggressive monetary and fiscal stimulus that helped
revive Japan's economy, although analysts doubt how much of
Abe's reforms will be fulfilled enough to boost long-term
OVERSEAS RISKS LOOM
Kuroda has been escalating calls for Abe to embark on bold
reforms as a rebound in domestic demand highlights supply
constraints that could curb long-term growth, such as a shortage
of young workers in a rapidly ageing population.
The governor, however, signalled that he will not use a lack
of progress in boosting Japan's potential growth as an excuse
for not achieving the central bank's inflation target.
"The bank's mission to ensure price stability remains
unchanged irrespective of the level of the potential growth
rate," he said.
The BOJ has kept policy steady since deploying an intense
burst of stimulus in April last year, when it pledged to double
base money via aggressive asset purchases to accelerate
inflation to 2 percent in roughly two years.
Kuroda said that while the economy was recovering moderately
and making steady progress in emerging from deflation, it was
still "half way through" meeting the BOJ's price target.
He also warned that a rebound in now-stagnant exports,
fuelled by a recovery in overseas growth, was key for Japan to
achieve the central bank's upbeat economic scenario.
"There remain various uncertainties regarding the outlook
for overseas economies, which all warrant vigilance," he said,
pointing to excess capacity weighing on Chinese economic growth,
high inflation plaguing some emerging economies and looming
(Editing by Chris Gallagher and Richard Borsuk)