retaliation from all affected regions on an equivalent amount of u. s. exports. “ scenario 4 : confidence shock ” introduces a temporary global shock to confidence on top of scenario 3. it is assumed that advanced economies see risk premiums increase by 30 basis points - - about half the increase observed during the “ taper tantrum ” - - around two years after the additional tariffs, while emerging economies would face a shock that is twice as large. source : imf, ” g20 surveillance note, july 21 - 22, 2018. ” chart 3 real gdp growth and breakdown by component ann., q / q % chg. private consumption government spending imports real gdp private business fixed investment, etc. exports change in inventories, etc. - 5 - 10 - 15 cycy 17 17 source : cabinet office, “ quarterly estimates of gdp for april - june 2018 ( first preliminary estimates ). ” chart 4 outlook for economic activity and prices ( july 2018 outlook report ) medians of policy board members ’ forecasts, y / y % chg. fiscal 2018 forecasts made in april 2018 fiscal 2019 forecasts made in april 2018 fiscal 2020 forecasts made in april 2018 real gdp cpi ( all items less fresh food ) + 1. 5 + 1. 1 + 1. 6 + 1. 3 + 0. 8 + 1. 5 + 0. 8 + 1. 8 + 0. 8 + 1. 6 + 0. 8 + 1. 8 note : figures for the cpi ( all items less fresh food ) exclude the direct effects of the consumption tax hike scheduled to take place in october 2019. source : bank of japan, “ outlook for economic activity and prices, ” july 2018. chart 5 household consumption before and after consumption tax hikes consumption before and after tax hikes real private consumption by type apr. 1996 and apr. 2013 = 100 104. 9 durable goods 104. 6 120 103. 9 non - durable goods services 100. 5 122. 3 tax hike in fiscal 2014 ( from 5 % to 8 % ) tax hike in fiscal 1997 ( from 3 % to 5 % ) apr. 2013 = 100 106. 9 106. 3 103. 0 99. 4 95. 8 87. 7 96. 8 13 fy 1996 14 fy 2013 92. 8 note : the latest figures are as of june 2001 and june 2018. source : cabinet office, “ synthetic consumption index. ” 13 年 [UNK] fy 2013 14 notes : 1. the latest figures are

yen weakening. domestic wholesale prices continue to decline as a whole mainly in machinery and chemical products, although the decrease in the prices such as of electronic parts seems to have ceased. consumer prices are weakening reflecting the decline in prices of imported products and their substitutes. corporate service prices continue to decrease. as for the conditions surrounding price developments, the effects of the past decline in crude oil prices are likely to continue for a time. on the other hand, the recent yen ’ s depreciation is regarded as a factor to support prices in the period ahead. however, as the economy continues to deteriorate, the balance between supply and demand in the domestic market will increasingly exert downward pressure on prices. furthermore, in addition to the declining trend of machinery prices caused by technological innovations, the decreases in the prices of goods and services reflecting deregulation and the streamlining of distribution channels will continue to restrain price developments. overall, prices are expected to follow a gradual declining trend for the time being. moreover, given the high this report is based on data and information available at the time of the bank of japan monetary policy meeting held on january 15 and 16, 2002. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on january 15 and 16 as the basis for monetary policy decisions. degree of uncertainty regarding future economic developments, the possibility that weak demand will further intensify downward pressure on prices warrants careful monitoring. in the financial market, the overnight call rate continues to move around zero percent as the bank of japan provided further ample liquidity to the money market by aiming at maintaining the outstanding balance of the current accounts at the bank at around 10 to 15 trillion yen due to the changes in the guideline for money market operations decided at the monetary policy meeting held on december 19. interest rates on term instruments are declining on the whole reflecting additional monetary easing measures. the japan premium remains negligible. yields on long - term government bonds rose slightly and are mainly moving around 1. 40 - 1. 45 percent recently. as for the yield spreads between private bonds ( bank debentures and corporate bonds ) and government bonds, while spreads between bonds with relatively high credit ratings and government bonds remain mostly unchanged, those between bonds with low credit ratings and government bonds tend to expand. stock prices rebounded somewhat towards the start of the year, but are weakening recently. in the foreign exchange market, the yen depreciated further towards the