regarding the pace of recovery in overseas economies. in addition, domestic demand continues to be weak for some time. consequently, it will take quite a while for the economy as a whole to stop declining evidently. while the economy continues to be in a fragile state, continuous attention should be paid to the fact that unstable movements in the foreign and domestic financial markets are apt to have a negative impact on the real economy. with regard to prices, import prices are increasing reflecting the depreciation of the yen since around the end of last year and the rise in international commodity prices. the decline in domestic wholesale prices is contracting against the background of the increase in import prices and the progress in inventory adjustment. consumer prices continue to decline with the persisting effects of the fall in crude oil prices in the latter half of last year, while the prices of imported products and their substitutes keep on falling. corporate service prices continue to decline. as for the conditions surrounding price developments, the depreciation of the yen from around the end of last year and the rise in international commodity prices including crude oil are regarded as factors to this report is based on data and information available at the time of the bank of japan monetary policy meeting held on april 10 and 11, 2002. the bank ’ s view of recent economic and financial developments, determined by the policy board at the monetary policy meeting held on april 10 and 11 as the basis for monetary policy decisions. support prices for the time being. however, since domestic demand is projected to remain weak for a time, the balance between supply and demand is expected to keep exerting downward pressure on prices. furthermore, factors such as the ongoing technological innovations in machinery, deregulation, and the streamlining of distribution channels will restrain prices. in addition, the growing trend in the rate of decline in wages may also work as a factor to push prices downward, mainly in services prices which are apt to be influenced by this aspect. overall, prices are expected to follow a gradual declining trend for the time being. moreover, given the high degree of uncertainty regarding future economic developments, the possibility that weak demand will further intensify downward pressure on prices continuously warrants careful monitoring. as for the financial market, in the short - term money markets, the end - of - march outstanding balance of the current accounts at the bank of japan was 27. 6 trillion yen as the bank provided further ample liquidity to the money market toward the fiscal year - end in reaction to the increase in liquid

the very rapid build - up in local government and corporate debt over the past five years. so while the long term future dairy trade with china seems assured, there are risks of temporary disruption along the way. two particular issues are firstly, whether we have diversified our dairy export markets sufficiently, and secondly, could we find that our market leadership in respect of exports of whole milk powder is challenged? there are grounds for optimism on the diversification front. fifty years ago, nearly 90 percent of our dairy exports went to the united kingdom, today it ’ s 0. 3 percent. currently, fonterra operates in more than 100 countries, several emerging market economies are growing rapidly, and new trading opportunities are being opened up through international trade agreements, and possibly through a trans - pacific partnership if negotiations are successful. india, rather than china, is forecast by the australian bureau of agricultural and resource economics and sciences to be the major new market opportunity for dairy exports in the future. the bureau projects global demand for dairy products to increase from usd7 billion bis central bankers ’ speeches in 2007 to usd85 billion in 2050 ( in 2007 usd ) 1. by 2050, india ’ s import demand for dairy products is projected to be usd48 billion – more than three times china ’ s usd15 billion, given the projected growth in china ’ s domestic production. world bank projections suggest that china and india could be the world ’ s largest and third largest economies at that time. figure 8 : projected global demand for dairy imports source : abares. a second risk is that a strong competitor enters the chinese market and threatens our market share. new zealand supplied over 70 percent of china ’ s dairy imports in 2013 ( figure 9 ). figure 9 : chinese imports of dairy products source : un comtrade. linehan v, thorpes, andrews n, kim y, beaini f, march 2012 food demand to 2050. opportunities for australian agricultural research by the australian bureau of agricultural and resource economics and sciences. conference paper 12. 4. bis central bankers ’ speeches this high market share reflects the high quality of our product, in terms of nutritional value and safety, and the marketing skills in achieving major inroads into a market that others have found difficult. but other countries also produce clean milk and these producers have seen the high returns and market share that new zealand enjoys in china. some, like the us producers, are investing in whole milk powder driers. while new zealand is likely to continue