has begun reducing the pace of its asset purchases. accordingly, i view risks to the outlook as generally balanced. b. sustainability of economic recovery the main feature of the current economic recovery is that it is driven not by exports but by consumption and nonmanufacturing activities. the recovery in consumption is not due merely to increased consumption of high - end goods and services supported by a rise in stock prices. an underlying factor is progress with efforts to boost potential demand in areas related to ordinary consumption and nonmanufacturing. firms ’ profitability has been increasing, and this seems to have brought about a recovery trend in the employment and income situation. 1. current economic recovery driven by consumption and nonmanufacturing let me first examine the current economic recovery that has been driven by consumption and nonmanufacturing. figures for private consumption expenditure, exports, business fixed investment, and public investment indicate that the pattern of the former recovery, driven by exports, can be clearly observed in the expansionary phase of 2002 to 2008 ( chart 4 ). although exports have subsequently recovered from the sharp drops following the lehman shock and the great east japan earthquake, they have been more or less flat in the longer run. in contrast, consumption expenditure has shown steady growth, albeit with various effects, and has posted even higher growth since the start of 2012. the improving trend in consumption is evident even when compared with developments in business fixed investment and public investment. business fixed investment – which, like exports, previously led the economic recovery – has recently been showing a small pick - up. public investment has finally exhibited a marked increase since the april - june quarter of 2013. the fact that consumption has been posting increasingly higher growth in the initial phase of economic recovery – without being accompanied by increases in exports and 4 business fixed investment at home – deserves special mention. breaking down the improvement in private consumption into goods and services, both have been showing increasingly higher growth over the past few years ( chart 5 ). a further breakdown of goods consumption into “ the sum of semi - durable goods and non - durable bis central bankers ’ speeches goods, ” such as clothing and food, and “ durable goods, ” such as automobiles and furniture, indicates that the former has remained more or less flat while the latter has continued to increase significantly following the lehman shock ( chart 6 ). this suggests that, within private consumption, services consumption and durable goods consumption in particular have been the driving force of economic recovery these past few years. it

run, demographics of the elderly are a given. thus, reviewing the current social welfare framework in order to make it viable on a sustainable basis, taking into consideration the longer - term changes in demographics, is an enormous challenge. iv. conclusion when one looks back into history, the “ global shifts ” examined by professor eichengreen are happening continuously. i believe japan ’ s catching - up with the advanced economies through its post - war miracle and its ensuing transition to slow growth, as well as the current high growth of china and india, can be understood as examples of the “ global shifts ” ( slide 12 ). high growth cannot last forever. in concluding, i would like to emphasize that what is important here is to introduce a smooth transition from high growth to stable growth. even emerging economies which are currently enjoying high growth will likely face, in the future, the same challenges that japan is currently struggling with. for this, preventing bubbles, reviewing business models and preparing for changes in demographics are especially important. thank you for your attention. bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches bis central bankers ’ speeches