Business fixed investment-- a crucial factor of domestic demand-- is projected to remain somewhat weak for the time being in manufacturing, but follow a moderate increasing trend thereafter, partly due to investment related to disaster prevention and energy.
Looking at the outlook in detail by major component, business fixed investment is projected to continue to see a moderate increase on the back of a marked improvement in corporate profits and accommodative financial conditions.
Private consumption is expected to follow a moderate increasing trend as there will continue to be replacement demand for durable goods, and the employment and income situation will continue to improve.
Looking at the changes in deposits as well as loans prior to and after the introduction of quantitative and qualitative monetary easing(QQE), deposits continued their increasing trend while loans turned to a moderate increase after leveling off.
The Consumption Activity Index(CAI)-- which the Bank calculates by combining various sales and supply-side statistics-- has followed a moderate increasing trend since the second half of 2016 Chart 8.
Business fixed investment is likely to fall back temporarily in the April-June quarter following the substantial increase in the previous quarter, but is projected to follow a moderate increasing trend as corporate profits continue their improving trend.
As for the outlook, they concurred that exports would likely continue their moderate increasing trend for the time being on the back of the continued firm growth in the global economy.
Net exports(real exports minus real imports) will come to a temporary pause due to the completion of inventory restocking activity in East Asian economies, but will return to a moderate upward trend after entering fiscal 2001.
As for the household sector, household spending is expected to follow a moderate upward trend as the positive influence of the strength in the corporate sector feeds through into the household sector slowly but steadily.
In these circumstances, business fixed investment, which has recently shown some weakness on the whole, is projected to turn to a moderate increasing trend Chart 22.
Members concurred that private consumption had been on an increasing trend, and was likely to continue to recover steadily, partly against the background of a gradual increase in household income.
Nationality and gender: The recent increase in HIV cases is ascribable mainly to the increase in Japanese males, but Japanese females are also increasing gradually.
As for domestic demand, public investment is likely to stay at a high level and business fixed investment is projected to follow a moderate increasing trend as corporate profits continue on their improving trend.
Business fixed investment is expected to maintain its gradual upward trend reflecting the high corporate profits, although some leading indicators have been weak recently.
Private consumption is also expected to follow a moderate increasing trend as the employment and income situation continues to improve. Moreover, exports are expected to continue their moderate increasing trend on the back of the growth in overseas economies.
Under these circumstances, business fixed investment is likely to follow a moderate increasing trend, given its noticeable growth on a GDP basis and the upward trend in machinery orders, which represent a leading indicator of machinery investment.
Domestic private demand is likely to continue increasing against the background of high corporate profits and the moderate rise in household income, while structural adjustment pressure stemming from the excess capacity and debt of firms has almost dissipated.
Going forward, against the backdrop of a moderate recovery trend in the economy, an increase in exports, and the decline in crude oil prices, corporate profits are likely to continue improving and business fixed investment is projected to continue on a moderate increasing trend.
While the sluggishness in exports and production is likely to exert downward pressure on the real GDP growth rate for the April-June quarter of 2015, which will be released in August, what matters is whether both exports and production will emerge from the pause and trend moderately upward again from summer.
To start with the corporate sector, despite the headwind from overseas economies explained earlier, corporate profits have remained at high levels, especially in the nonmanufacturing sector, and business fixed investment has been on a moderate increasing trend on the back of such favorable profits.
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