percent in 2004. in particular, the rapid growth of the chinese economy has been conspicuous. it was over 9 percent in 2003, despite the adverse effect of severe acute respiratory syndrome ( sars ). in fact, the chinese economy has been growing at an annual rate of 8 to 9 percent as if it were hardly susceptible to economic fluctuations. recently, whether the economy will smoothly adjust to a more moderate and sustainable growth path is becoming a focus of attention. the current recovery, driven by expansion in the world economy, particularly the chinese economy, seems to differ from the past in that japan ’ s economy is not just exporting its way out. as i remarked at the beginning, the interrelationships among various economies have become pronounced. it is worth noting that substantial progress has been made in the international division of production processes, particularly for it - related goods in which the division of labor and concentration of production tend to work most effectively. it - related investment has been pursued actively all over the world, led by the united states. against this background, the process of manufacturing finished goods has been increasingly carried out across a number of countries to take advantage of differences in the degree of technological progress, the make - up of the labor force, the condition of infrastructure, and the efficiency of public services. interrelationships among economies have also been strengthened through integrating production processes across borders. for example, the production of semiconductor fabrication machines and equipment as well as high - value - added parts for digital home appliances has been rising in japan. these parts as well as machines and equipment have been shipped to the east asian countries for processing and assembly, which have also been on the rise recently. finally, finished goods have been exported, for example, back to japan. thus, in the trade between japan and other east asian economies, both exports and imports have been increasing substantially. the recovery in the japanese economy should be understood as taking place in tandem with the strengthening of its interdependence with the world economy, and particularly with other east asian economies. current situation and outlook for the economy japan ’ s economy has entered a recovery phase since around the summer of 2003. during 2004, the recovery has gradually been spreading from manufacturing to nonmanufacturing firms, from large to small firms, and from urban to regional economies. the decline in employment and household income is finally coming to an end, and japan ’ s economy is expected to continue recovering. at the end of april, the bank released

insurance. " figures from 2009 / q2 onward exclude pure holding companies. small and medium - sized firms are firms with a capitalization of 10 million yen or more but less than 1 billion yen, while large firms are firms with a capitalization of 1 billion yen or more. 2. in the right - hand chart, the tankan figures include software and r & d investments and exclude land purchasing expenses. r & d investment is not included before the march 2017 survey. the figures are for all industries including financial institutions. the figure for private nonresidential investment for fiscal 2022 is the 2022 / q2 - q4 average. sources : cabinet office ; ministry of finance ; bank of japan. chart 5 prices and policy interest rates in major economies inflation policy interest rates y / y % chg. japan % japan united states united states euro area euro area - 2 cy15 - 1 cy15 notes : 1. in the left - hand chart, figures for japan are the cpi for all items less fresh food, excluding the effects of the consumption tax hikes, etc. those for the united states are the cpi for all items. those for the euro area are the hicp for all items. 2. in the right - hand chart, figures for japan are the rates applied to financial institutions'current accounts ( the policy - rate balances ) at the bank of japan. those for the united states are the medians of the target ranges for the federal funds rate. those for the euro area are the rates on the deposit facility. sources : bloomberg ; eurostat ; ministry of internal affairs and communications ; u. s. bureau of labor statistics. chart 6 forecasts for economic growth in g7 countries real gdp growth rates for 2023 ( imf forecasts ) 2. 0 % 1. 5 1. 0 0. 5 0. 0 - 0. 5 - 1. 0 japan canada united states france italy germany united kingdom note : figures are as of january 2023. source : imf. chart 7 boj forecasts for real gdp s. a., ann., tril. yen fy 2024 + 1. 1 % fy 2023 + 1. 7 % fy 2022 + 1. 9 % fy 13 14 15 16 17 18 19 20 21 22 23 24 note : the forecasts presented are the medians of the policy board members'forecasts in the january 2023 outlook report. the values of real gdp