reserve and the extension of tax cuts introduced by the bush administration, led to optimism regarding the u. s. economy. caution, however, has returned as personal consumption has been curtailed by higher prices for gasoline and other daily necessities, leading to a slight decline in the growth rate of the economy overall. moreover, job market data for may showed that nonfarm payroll employment was well below market forecasts, indicating that the recovery in the job market remains shaky. with balance - sheet adjustments continuing to be a burden and the path for addressing the fiscal deficit unclear, the need to pay attention to downward risks is increasing. even though upward momentum is currently weak, however, the bank ’ s main scenario, which expects the u. s. economy to recover moderately, remains unchanged. while developments up to the present are somewhat on the low side, they are within the range of expectations. as for the outlook, exports – mainly to emerging and commodity - exporting economies – are expected to follow an upward trend. furthermore, the u. s. stock market, which has been in an adjustment phase for the past few weeks, remains firm from a longer - bis central bankers ’ speeches term perspective. in this environment, private consumption and business fixed investment are unlikely to deteriorate to any serious extent. in short, we should be aware of the downside risks without being unduly pessimistic. economic activity in the euro area is recovering moderately as a whole, although the contrast has been increasing further between the strong performance of germany and the performance of peripheral countries with serious fiscal problems such as greece and portugal. as for the outlook, the situation as a whole is likely to remain unchanged, with the moderate recovery continuing. however, since around april 2011, doubts have emerged regarding the credibility of greece ’ s plans for fiscal reconstruction and funds procurement, leading to a surge in the yield on 10 - year greek government bonds to record levels of more than 15 percent. the surge triggered a rise in the yields on government bonds issued by other peripheral countries. damage could spread from financial markets to economic activity. therefore, it is necessary to closely watch fiscal developments in greece and other peripheral countries, as well as the response of the european union ( eu ) as a whole. b. emerging and commodity - exporting economies emerging and commodity - exporting economies are expanding steadily, led by firm domestic demand. moreover, although these economies are likely to continue tightening their monetary policies in response to heightened concerns

of increase of around 2 percent, and total cash earnings per employee have risen moderately but steadily. against the background of such improvement in the employment and income situation, private consumption has been increasing moderately, albeit with fluctuations. let me now talk about the outlook for japan's economy. the bank projects that the economy is likely to continue its moderate expansion. in the outlook report released last week, the real gdp growth rate for fiscal 2018 is projected to be 1. 4 percent, and this is clearly above japan's potential growth rate, which is estimated to be in the range of 0. 5 - 1. 0 percent. as for fiscal 2019 and 2020, the real gdp growth rates are both projected to be 0. 8 percent ( chart 5 ). the economy is expected to continue on an expanding trend, partly supported by external demand, although the growth pace is projected to decelerate, due mainly to a cyclical slowdown in business fixed investment and the effects of the scheduled consumption tax hike. there are, of course, upside and downside risks to this baseline scenario of the outlook for japan's economic activity. in particular, uncertainties regarding overseas economies appear to have heightened recently. of these uncertainties, the consequences of recent protectionist moves, including the trade friction between the united states and china, warrant attention, and an active exchange of views regarding this issue took place at the group of twenty ( g - 20 ) meeting held in indonesia last month. as was discussed at the meeting, the impact of protectionist policies on the global economy varies, largely depending not only on the direct effects of downward pressure on trade activity but also the extent to which it spreads to firms'fixed investment stance and global financial markets. according to simulation analyses related to this issue by some international organizations, the degree of impact varies to some extent depending on the assumptions. meanwhile, the bank judges that the impact on japan's economy has been limited so far, mainly based on the recent tankan ( short - term economic survey of enterprises in japan ) and interviews with firms. however, firms have voiced that it is difficult to accurately gauge the potential impact at this point. in addition to this, if protectionist moves last for a long time, we will need to pay attention to the possibility that their effects on japan's economy will become more significant through the various channels that i mentioned earlier. needless to reiterate, protectionist policies will not benefit any economy. therefore, a brake is