deceleration, particularly in domestic demand. growth momentum in the asean countries remains weak. under these circumstances, i am paying attention particularly to developments in emerging and commodity - exporting economies, the prospects for the european debt problem, and the pace of recovery in the u. s. economy as risks to the outlook for overseas economies. b. current state of and outlook for japan ’ s economic activity and prices japan ’ s economy has continued to recover moderately. according to the second preliminary estimate of the real gdp growth rate in the october - december quarter of 2013 released on march 10, 2014, which registered 0. 2 percent on a quarter - on - quarter basis and 0. 7 percent on an annualized quarter - on - quarter basis, the economy continued to increase at a pace considered to be above its potential for four consecutive quarters. looking at each bis central bankers ’ speeches component, exports – which registered a small increase of 0. 4 percent on a quarter - onquarter basis – are likely to have leveled off more or less recently, considering developments in real exports in january 2014. business fixed investment has increased for three consecutive quarters on a quarter - on - quarter basis, and the pick - up has become evident as corporate profits have improved. while a front - loaded increase in demand prior to the consumption tax hike in april 2014 has recently been observed, private consumption has remained resilient as a trend with improvement in the employment and income situation. with regard to the outlook, japan ’ s economy is expected to continue its moderate recovery as a trend, albeit with some fluctuations caused by the consumption tax hike. exports are expected to increase moderately, mainly against the background of the recovery in overseas economies. public investment is expected to trend upward for the time being and then become more or less flat at a high level. business fixed investment is projected to follow a moderate increasing trend. private consumption and housing investment, albeit with some fluctuations caused by the consumption tax hike, are expected to remain resilient as a trend, supported mainly by improvement in the employment and income situation. meanwhile, prices have risen markedly in the past year. the year - on - year rate of increase in the consumer price index ( cpi, for all items less fresh food, and the same hereafter ) has been around 1 – 1 / 4 percent for three consecutive months through january 2014 – the first time since november 2008 that it has exceeded 1. 0 percent. on a basis excluding food and energy, it has

quality - based ” growth and targeting well - balanced growth, the pace of economic growth in china is expected to be restrained relative to the high growth in the mid - 2000s. the nies and the asean economies are picking up only moderately, led by the corporate sector, but are expected to gradually regain momentum underpinned by firm private consumption. b. japan ’ s economy and prices 1. economic activity i will now explain the current state of, and outlook for, japan ’ s economy given the overseas economic developments i have just outlined. japan ’ s economy picked up rapidly following the plunge caused by the great east japan earthquake, which struck just as the economy was recovering from the lehman shock, and it posted relatively high growth in the first half of 2012. in the second half of 2012, however, the economy as a whole was relatively weak as exports and industrial production dropped sharply due to the effects of the deceleration in overseas economies. however, this downward momentum has recently been coming to an end. specifically, the pace of decrease in exports has been moderating in a situation where some signs of picking up have been observed in overseas economies, particularly in the united states and china. in addition, private consumption has been resilient, and the effects of the decline in car sales due to the ending of subsidies for purchasers of environmentally friendly cars have fallen off. meanwhile, public investment has continued to increase, and housing investment has generally been picking up. with regard to the outlook, as the effects of various economic measures underpin domestic demand and overseas economies emerge from the deceleration phase, exports and industrial production are likely to start picking up, and these improvements are likely to feed through into business fixed investment and private consumption. in addition, recent movements in foreign exchange rates are likely to contribute to the underpinning of exports and corporate profits. under these circumstances, japan ’ s economy is likely to more or less level off for the time being and subsequently return to a moderate recovery path toward mid - year. bis central bankers ’ speeches the economic growth rate in fiscal 2013 is expected to be relatively high, mainly owing to the effects of various economic measures and foreign exchange rate movements. although the economic growth rate is likely to decrease mainly due to a decline in demand following the front - loading of consumption prior to the consumption tax hike, growth is expected to remain above potential in fiscal 2014. in the bank of japan ’ s interim assessment in january 2013, the median of the policy board members