of japan ’ s economy. such increases in supply capacity could result in generating deflationary pressure unless they are accompanied by corresponding increases in aggregate demand. therefore, to mitigate any deflationary pressure stemming from structural reforms, support through appropriate monetary easing is indispensable. iii. future challenges while the japanese government aims at achieving 2 percent growth in real gdp, if the growth strategy stalls and strengthening of the growth potential does not move ahead, achievement of the price stability target could lead to a low real growth rate with mild inflation. of course, overcoming protracted deflation itself is a great achievement, but in terms of revitalizing japan ’ s economy, it will not be enough. the bank strongly hopes the government will further enhance its growth strategy in order to strengthen japan ’ s growth potential. on the other hand, if the potential growth rate rises as a result of structural reforms under the growth strategy, the output gap might temporarily worsen, leading to downward pressure on prices. however, since the bank, based on the aim of achieving the price stability target of 2 percent, will continue with qqe as long as necessary to ensure price changes remain in line with the target in a stable manner, such downward pressure on prices can be staved off. we at the bank are optimistic that japan will be able to achieve higher economic growth with a stable inflation rate of about 2 percent before long, and will continue to pursue our policy of qqe to that end. this concludes my remarks. 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

october – december quarter of 2013. the purchasing managers ’ index ( pmi ) for manufacturing activity has recently shown some weakness, but the chinese economy is expected to basically maintain stable growth at around the current pace under state control. among other emerging and commodityexporting economies, economic developments in the nies are picking up, particularly in exports, as the effects of the economic recovery in advanced economies spread to them. in contrast, growth momentum in the asean countries has remained weak because of their relatively limited ability to profit from the recovery in advanced economies. in particular, there are concerns about the impact of unstable political situations in some of these countries on trade with japan, for example. among emerging and commodity - exporting economies, some of them – which have structural vulnerabilities such as current account deficits – saw nervousness in their markets at one point as the federal reserve proceeded to reduce the pace of its asset purchases, but the situation recently regained stability. b. japan ’ s economic activity and prices 1. current situation a. economic activity now, i will discuss japan ’ s economic activity. bis central bankers ’ speeches the bank ’ s current assessment is that japan ’ s economy has continued to recover moderately. moreover, a front - loaded increase in demand prior to the consumption tax hike has recently been observed. real gdp for the october – december quarter of 2013, released on february 17, 2014, showed quarter - on - quarter growth of 0. 3 percent, representing the fourth consecutive quarter of positive growth. by component, private demand for the quarter, including private consumption and business fixed investment, recorded a higher growth rate than in the july – september quarter. as for private consumption, consumption of goods such as durable goods increased partly reflecting the front - loaded increase in demand prior to the consumption tax hike amid the improvement in the employment and income situation evidenced by the increase in winter bonus payments. business fixed investment, which had previously been lacking momentum compared to firms ’ annual fixed investment plans and the improving trend of their profits, rose noticeably at last in the october – december quarter. in contrast, exports have lacked momentum to date despite the recovery trend in overseas economies, mainly advanced economies, and movements in the foreign exchange market. as imports grew substantially, net exports continued to significantly push down the gdp growth rate, as they had in the july – september quarter. although only a handful of economic indicators have been released for the period starting in january 2014, the seasonally adjusted number of new passenger -