Japan aims to turn investment surge into lasting growth, finance minister tells WEF

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Takayuki Morita President, Chief Executive Officer and Representative Director, NEC
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Japan's Finance Minister Satsuki Katayama
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Gideon Rachman, Associate Editor and Chief Foreign Affairs Commentator, Financial Times
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Dr Kevin Rudd, Ambassador of Australia to the United States of America
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Mazen S. Darwazeh Executive Vice-Chairman; President, Middle East and North Africa, Hikma Pharmaceuticals
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Updated 20 January 2026
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Japan aims to turn investment surge into lasting growth, finance minister tells WEF

  • Kevin Rudd, former Australian prime minister and current ambassador to the US, said Japan is widely viewed across the Indo-Pacific as a stabilizing economic and strategic force

DUBAI: Japan’s new government is seeking to move away from decades of deflation and cost-cutting by pursuing large-scale investment in strategic technologies, resilient supply chains and productivity growth, Finance Minister Satsuki Katayama said during a World Economic Forum session on Japan’s economic future.

Speaking at the WEF discussion “How can we unlock new sources of growth? Japan’s Turn,” Katayama said Japan is at a “dramatic moment” as Prime Minister Takaichi Sanae’s administration seeks a fresh mandate following the dissolution of the lower house announcement made this week.

“She will take on three major policies and put them to the choice of the Japanese people,” Katayama said, describing the government’s approach as one aimed at reviving growth “through responsible and proactive public finances.”

The session, moderated by Gideon Rachman, brought together senior political and business figures to assess whether Japan’s recent economic momentum can be turned into sustainable long-term growth amid demographic decline and rising geopolitical pressure.

Katayama pointed to signs that Japan is emerging from its long deflationary period, citing stronger confidence, investment and wage growth.

“Japan’s nominal GDP has surpassed 4 trillion US dollars. Capital investment is at record high, and wages have risen over 5 percent for two consecutive years,” she said, adding that the Nikkei average is now “about five times its 2012 level.”

“These results show Japan is shifting from a deflationary, cost-cutting economy to a dynamic, growth-oriented one driven by bold investment and productivity gains,” she said.

Katayama also highlighted improving public sentiment, noting that confidence in politics among young adults had risen sharply and that “almost 50 percent viewed Japan’s future as bright.”

According to Katayama, the government’s growth strategy rests on large-scale public-private investment in areas critical to both economic performance and national resilience, particularly as Japan’s population continues to shrink.

“Achieving a strong Japanese economy requires strategic fiscal action based on responsible and productive public finances,” she said. “We aim to lift incomes, restore consumer confidence and create a richer cycle of improving corporate profitability.”

Among the priority areas, she cited semiconductors, artificial intelligence and robotics.

Katayama also addressed Japan’s position between the US and China, describing the geopolitical pressure as a long-standing reality.

“We are between the United States and China and we cannot move geopolitically,” she said. “The United States is the only country with which we have a national security treaty.”

She said Japan continues to face restrictions from China “without any good reason,” but added that cooperation with the US and G7 partners remains strong, particularly on critical minerals and supply-chain resilience.

Kevin Rudd, former Australian prime minister and current ambassador to the US, said Japan is widely viewed across the Indo-Pacific as a stabilizing economic and strategic force.

“The rest of the Indo-Pacific is very bullish about Japan,” Rudd said. “Japan is seen as a force for strength, for stability, and increasingly for prosperity.”

He said Japan’s push into AI and advanced manufacturing would reinforce regional resilience, noting that supply chains for semiconductors and critical minerals must be broadened beyond a small number of producers.

“Those of us who succeed and adapt to the AI universe will prevail,” Rudd said.

From a corporate perspective, Takayuki Morita, president and CEO of NEC, said Japan’s shrinking workforce makes the adoption of AI and robotics less socially contentious than in other economies.

“Japan is suffering from a shortage of workforce,” Morita said. “Everybody is happy to get robotics and AI into the real world.”

Morita argued that Japan has strengths in applying AI to real-world industrial and infrastructure settings, particularly through the use of proprietary and physical data rather than internet-based models alone.

“Japan is one of the few countries that can develop large language models from scratch,” he said, adding that this positions the country to contribute to global technological stability beyond the US-China rivalry.

However, some business leaders warned that structural and cultural barriers remain. Mazen Darwazeh, executive vice-chairman of Hikma Pharmaceuticals, said Japan’s innovation potential has not always translated into openness for foreign companies.

“Japan is a first-class country with first-class technology, but at the same time, it is a closed society whereby it’s difficult for outsiders to do business,” he said.

Darwazeh also pointed to regulatory obstacles in pharmaceuticals and clinical research, arguing that greater openness would be essential as Japan confronts demographic decline and global competition.


Red Sea’s oxygen balance under strain, experts warn

Updated 13 February 2026
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Red Sea’s oxygen balance under strain, experts warn

  • Scientists say warming waters, nutrient runoff and coastal development could quietly erode coral resilience

RIYADH: The Red Sea may not have dead zones, but its fragile ecosystem is vulnerable to oxygen depletion — a quiet decline that can undermine coral health and disrupt marine life.

Sea dead zones are hypoxic or low-oxygen pockets that form most often when nutrient pollution — especially nitrogen and phosphorus from farm runoff and wastewater — fuels blooms that ultimately strip oxygen from the water.

Experts say the risk is not inevitable, but it depends on earlier detection and tighter control of the conditions that drain oxygen from coastal waters.

A sea that relies on its own “breathing” is also a sea shaped by geography.

FASTFACT

DID YOU KNOW?

  • The Red Sea is naturally low in oxygen because of its warm waters and high salinity — making it especially vulnerable to further oxygen decline.
  • The Red Sea’s narrow Bab Al-Mandab strait limits deepwater exchange, meaning the basin largely depends on its own internal circulation to ‘replenish’ oxygen.
  • Saudi Arabia’s coastline features steep underwater drop-offs, allowing deep, oxygen-poor water to move closer to coral reefs near shore.

Matheus Paiva, a senior oceanographer, told Arab News that “the Red Sea’s shallow Bab Al-Mandab choke point limits deepwater exchange,” meaning oxygen replenishment depends heavily on internal overturning circulation.

He said this circulation is driven as surface waters flow north, cool, become denser and sink, helping ventilate deeper layers through vertical mixing.

Paiva said the Saudi coastline’s underwater topography makes the risk more immediate close to shore.

Coral reefs along Saudi Arabia’s Red Sea coast, where scientists say warm, salty waters and limited deep-water exchange can leave ecosystems vulnerable to low-oxygen stress. (Unsplash.com)

“Unlike regions with wide, gradual shelves, our coast features narrow fringing reefs that drop sharply into deep water via steep underwater cliffs and canyons,” he said.

“This ‘step-and-drop’ topography brings deep oxygen-poor water close to shore.”

Paiva said warming at the surface can intensify stratification and reduce vertical mixing. He said that can allow low-oxygen water to creep upslope and affect shallower reef zones.

How oxygen gets consumed faster than it’s replaced is where human pressure can tip the balance.

Carlos Duarte, executive director or the Coral Research and Development Accelerator Program at KAUST, told Arab News that the Red Sea’s baseline conditions create vulnerability. “Because of its warm waters and high salinity, the Red Sea is inherently low in oxygen and, therefore, vulnerable to processes that decline oxygen further.”

He said algal blooms and heat waves raise biological oxygen demand, linking low oxygen to coral mortality.

Duarte said human-driven nutrient and organic inputs can intensify these declines.

He said poorly managed urban development and aquaculture operations can contribute nutrient and organic loads that fuel algal blooms.

Coral reefs along Saudi Arabia’s Red Sea coast, where scientists say warm, salty waters and limited deep-water exchange can leave ecosystems vulnerable to low-oxygen stress. (Unsplash.com)

Duarte said that as bloom material decomposes, it strips oxygen from the water and can lead to hypoxia.

The Red Sea’s celebrated clarity reflects a naturally nutrient-poor system. “The risk is amplified because the Red Sea is naturally oligotrophic. It is nutrient-poor and crystal clear,” Paiva said.

He added that wastewater releases and heavy rain events that trigger flash floods can push large nutrient loads into coastal waters in a short time.

In turn, those pulses can threaten biodiversity and the marine environment that underpins tourism investments along the Kingdom’s Red Sea coast.

Seeing low oxygen coming — rather than reacting after the fact — is the promise of new monitoring and analytics.

Paiva said high-accuracy oxygen data still relies on direct measurements collected during vessel surveys.

Carlos Duarte, executive director or the Coral Research and Development Accelerator Program at KAUST.

“We still depend heavily on classic vessel surveys,” he said. Teams deploy multiparameter sondes to profile the water column and collect water samples to establish a baseline.

“This ‘water-truthing’ remains the industry standard for high-accuracy data,” he said.

Saeed Al-Zahrani, general manager for Saudi Arabia at NetApp, said continuous data can help teams intervene earlier. “Oxygen depletion is rarely sudden; it tends to build over time when conditions line up,” he said.

Al-Zahrani said AI can flag anomalies, learn what “normal” looks like in specific locations, and generate short-horizon risk forecasts.

He added that it creates a decision window — guidance on when to increase sampling, where to focus response efforts, and when to tighten controls around discharges.

Coastal development that reduces oxygen risk starts, Duarte said, with what never reaches the sea.

Duarte said Saudi Arabia’s west coast investments have an advantage compared with older coastal destinations: the opportunity to design sustainability into projects from the outset rather than trying to retrofit after degradation becomes evident.

Duarte said nutrient control is a direct lever to reduce oxygen-depletion risk. “Achieve circular economies where organic products and nutrients are recycled and reused in the system to avoid discharging nutrients to the marine environment,” he said.

Al-Zahrani said wastewater and environmental systems produce huge volumes of information, but fragmentation can slow decisions.

He said connecting data in near real time can help detect problems earlier and anticipate load spikes tied to rainfall, tourism peaks, or industrial activity.

Reef resilience depends on reducing stress before heat and low oxygen overlap.

Duarte told Arab News: “Coral reefs are extremely vulnerable to oxygen depletion.” He added that it can contribute to bleaching and mortality in a warmer ocean.

He said marine heat waves can worsen oxygen stress by reducing oxygen solubility and limiting ventilation of subsurface waters, while increasing oxygen demands of organisms.

Duarte said reducing nutrient inputs and managing reefs to avoid excessive growth of seaweed can build resistance.

He also said models that account for how waves and currents interact with reef topography — work he said is being developed at KAUST — can help guide restoration toward sites more likely to remain oxygenated during heat stress.