of 2012 as exports and production decreased mainly reflecting the deceleration in overseas economies, which in turn adversely affected domestic demand such as business fixed investment in the manufacturing sector. economic conditions, however, have become favorable since the beginning of 2013. recently, domestic demand, in particular public investment and private consumption, has been firm, exports have been picking up in a situation where overseas economies are gradually heading toward a pick - up, and industrial production is increasing moderately. against this backdrop, the june 2013 tankan ( shortterm economic survey of enterprises in japan ) showed a significant improvement in business sentiment not only in the manufacturing sector, which has greatly benefited from the correction of the yen ’ s appreciation, but also across a wide range of other sectors including nonmanufacturing, as well as upward revisions in firms ’ business forecasts such as with regard to profits and fixed investment. taking into account that the level of economic activity had been rising moderately and a virtuous cycle from income to spending had gradually started operating, the bank of japan, at the monetary policy meeting held on july 10 and 11, 2013, raised its basic assessment of the domestic economy, from the assessment that the economy “ has been picking up ” to the assessment that it “ is starting to recover moderately. ” as for the outlook, exports are expected to increase moderately, mainly reflecting the pick - up in overseas economies and the correction of the yen ’ s appreciation. as for domestic demand, public investment and housing investment are expected to continue trending upward, business fixed investment is projected to increase moderately reflecting the improvement in corporate profits and the employment situation, and private consumption is expected to remain resilient. in this situation, industrial production is also expected to increase moderately, judging from interviews with firms and other relevant information. against the backdrop of these developments in demand both at home and abroad as well as in production, japan ’ s economy is expected to recover moderately. let me elaborate on these developments for a moment. due in part to the correction of the yen ’ s appreciation and the rise in stock prices since the end of 2012, business and consumer sentiment has improved, and this improvement is likely to help underpin private consumption for the time being and gradually entice firms to increase their spending. increased private consumption is particularly evident among the middle - aged and the elderly, who hold more stocks than other age groups. consumption activity of the baby - boom generation is expected to remain firm due to their higher propens

measure to support lending to firms located overseas or lending by domestic financial institutions ’ overseas offices – including foreign currencydenominated lending – contributes to strengthening japan ’ s growth potential. in the first loan disbursement under this facility in june 2013, loans amounted to as much as 3. 1 trillion yen, underlining the strong demand for such funds. 2. the growth - supporting funding facility the growth - supporting funding facility was introduced with the aim of supporting the flow of funds to areas with growth potential. the bank introduced this facility because, in order to overcome deflation and achieve sustainable economic growth with price stability, the bank deemed it important to ( 1 ) reverse the downward trend in japan ’ s growth rate in the face of the unparalleled decline in the birthrate and aging of the population, ( 2 ) increase medium - to long - term growth expectations for japan ’ s economy, and ( 3 ) put japan ’ s economy on a higher medium - to long - term growth path. with this facility, the bank provides long - term funds – both yen - denominated and foreign currency - denominated – at a low interest rate to financial institutions for their lending and investment to areas that are expected to contribute to strengthening japan ’ s growth potential, such as medical and nursing care ; environment and energy ; agriculture, forestry, and fisheries ; and tourism. the total amount of lending under these arrangements was set to about 5. 5 trillion yen, and the current amount outstanding is nearly 4 trillion yen. the amount of lending and investment actually provided by private financial institutions using this facility greatly exceeds the amount of loans disbursed by the bank, demonstrating its usefulness as a catalyst. these measures are expected to continue promoting lending activity by financial institutions and to lead to an increase in firms ’ proactive demand for credit, such as that for business fixed investment. in order to sustain this cycle for strengthening the economy ’ s growth potential, it is necessary to help private economic entities to realize their potential to the fullest. in addition to support from the financial side, it is therefore important to build an economic environment where innovations in a broad sense – including the development of new business models – can be achieved more easily. recently, firms have been making active efforts in a wide range of areas to capitalize on social changes, including business focusing on the elderly, the environment and energy, and information and telecommunications. such developments need to be supported on the policy side as well.