act as a catalyst to further stimulate private firms ’ efforts to strengthen the foundations for economic growth. the number of financial institutions that intend to participate in the fund - provisioning measure to make efforts to strengthen the foundations for economic growth has exceeded 100. in addition, with the introduction of the measure, a considerable number of financial institutions established new dedicated funds as well as investment and lending schemes. the bank recognizes that japan ’ s economy faces the critical challenge of overcoming deflation and returning to a sustainable growth path with price stability. to this end, the bank will continue to consistently make the utmost contributions as a central bank with a focus on the three points that i have just mentioned : pursuing powerful monetary easing, ensuring financial market stability, and supporting efforts to strengthen the foundations for economic growth. from the second half of 2009 to the first half of 2010, during which time the global economy posted relatively high growth, based on the experience after the collapse of the bubble in japan the bank made a very conservative judgment that, as balance - sheet adjustments were weighing on the u. s. and european economies, the pace of recovery in the global economy was likely to remain moderate and downside risks were prone to increase. as such, the bank is the only central bank among advanced economies that has further enhanced monetary easing since december 2009. the bank has also introduced a new measure to support efforts to strengthen the foundations for economic growth. as these initiatives suggest, the bank has been actively introducing various new measures to support japan ’ s economy from the financial side, aiming to overcome deflation and return to a sustainable growth path with price stability. the bank will continue to carefully consider the outlook for economic activity and prices, and, if it deems it necessary, will take policy actions in a timely and appropriate manner upon considering the effects and side - effects of various policy measures.

economic growth rate is on a declining trend. aside from the high - growth era when the average annual rate of economic growth was slightly below 10 percent, in the 1980s the average annual growth rate was around 4. 5 percent, which exceeded the growth rates of other advanced economies. however, following the collapse of the bubble, japan ’ s annual growth rate declined significantly to around 1. 5 percent in the 1990s. it has then increased somewhat since the turn of the millennium, but the trend decline in the growth rate continues. in this situation, people will have lower expectations concerning future income growth and their spending and investment will be restrained, which will in turn lead to price declines. the deflation in japan should be understood as a manifestation of the fundamental problem facing the economy, namely the decline in growth expectations. even though japan ’ s economic growth rate is trending downward, the gdp growth rate per worker, or, in other words, the productivity growth rate, has been 1. 6 percent per year on average over the past decade. the rate has declined from earlier levels but exceeds the 0. 8 percent level in european countries and is still comparable to the 1. 8 percent level in the united states. at present, the percentage of the population aged 15 or older that is in employment, that is, the employment rate, is about 60 percent. if this rate declines further with the aging of the population, raising productivity will become an even more critical challenge. in attempting to raise productivity, it is important to recognize that, given the fierce global competition, doing so by cost reduction and improvement in cost structure alone has its own limits for the economy as a whole. for example, about 90 percent of the cpi inflation differential between japan and the united states in the past 10 years was attributable to the difference in the rate of decline in service prices. this appears to reflect the fact that, in japan, nominal wages have been adjusted flexibly. of course, cost reduction should be an important part of firms ’ strategies to enhance competitiveness, and japanese firms have achieved productivity rises through their drastic efforts to cut costs. however, in a situation where the population is declining and existing domestic markets are starting to shrink, it is essential to create new markets that can enable firms to enjoy high profits, in order to raise the productivity of japan ’ s economy as a whole. on this point, one view is that exploring new areas and creating new added value should be part of firms ’ growth strategies.