bank of japan ’ s august report of recent economic and financial developments1 bank of japan, 12 august 2002 * the bank ’ s view * * japan ’ s economy, despite persistent weakness in domestic demand and increasing uncertainty regarding the global economy, has almost stabilized as a whole with exports and production continuing to increase. with regard to final demand, business fixed investment continues to decrease and private consumption, despite some resilience, remains weak as a whole. moreover, housing investment remains sluggish and public investment continues to decline. meanwhile, net exports ( real exports minus real imports ) continue to increase significantly due to the recovery in overseas economies and also to the effects of restocking abroad, mainly in it - related goods. industrial production is picking up clearly in response to the upsurge in exports and adequate reduction of excess inventory stocks. against this background, corporate profits appear to have started to recover. in addition, the rebound in production is having effects on labor markets, albeit marginally, with an increase in overtime hours worked and in new job offers mainly for part - time workers. however, firms are still maintaining their stance on reducing personnel expenses and as a consequence, household income continues to decrease noticeably. thus, employment and income situation of households overall remains severe. turning to the economic outlook, the upward trend in exports is expected to continue against the background of the gradual recovery in overseas economies, although the pace is likely to slow as the impetus from overseas restocking weakens. thus, industrial production is expected to follow a gradual uptrend with some fluctuations in its pace. on the other hand, with respect to domestic demand, public investment is projected to follow a declining trend and private demand is likely to remain weak for the immediate future. yet, if the increase in exports and production mentioned above continues, the recovery in corporate profits will become distinct, and this will gradually bring a positive impact on domestic private demand. in fact, the decline in some leading indicators of business fixed investment has come to a halt. overall, it can be envisaged that the stabilization of japan ’ s economy will become more definite as the increase in exports and production, through the improvement in corporate profits, will underpin domestic private demand. however, considering that forces restraining the economy, such as excessive labor input and debt, are still persistently at work, momentum for a self - sustaining recovery will be subdued for some time. furthermore, stock prices in the u. s. and worldwide as well as

##zstatistik ) ). 15. bundesbank calculations based on the monthly balance sheet statistics ( bista ( bilanzstatistik ) ). 16. see koont, santos and zingales ( 2023 ). 17. see review of the federal reserve ’ s supervision and regulation of silicon valley bank [ https : / / www. federalreserve. gov / publications / files / svb - review - 20230428. pdf ]. 18. the volume of loans to non - financial corporations amounted to around €1. 6 trillion as at 31 march 2023. bundesbank calculations based on the borrowers statistics. 19. bundesbank calculations based on prudential reporting ( finrep ( financial reporting ) ). 20. it was assumed that the carbon price would rise incrementally from us ( united states ) $ 213. 24 in 2024 to us ( united states ) $ 266. 55 in 2025, and us ( united states ) $ 345. 07 in 2026. 21. the decision on whether to classify a sector as carbon - intensive or not was based on its participation in the eu ( european union ) emissions trading system. see deutsche bundesbank ( 2023 ). 22. see deutsche bundesbank ( 2021 ). 23. the survey we completed in march asked banks how far they had got with implementing the bafin ( bundesanstalt fur finanzdienstleistungsaufsicht ) guidance notice on dealing with sustainability risks. see ergebnisse der strukturierten erhebung zum umgang mit nachhaltigkeitsrisiken unter deutschen instituten | deutsche bundesbank [ https : / / www. bundesbank. de / de / aufgaben / bankenaufsicht / einzelaspekte / sustainable - finance / ergebnisseder - strukturierten - erhebung - zum - umgang - mit - nachhaltigkeitsrisiken - unter - deutschen - instituten - 799390 ]. 24. see hellwig ( 2000, p. 354 ). 25. see barth, caprio and levine ( 2012 ). 26. see dewatripont and tirole ( 1994 ). 27. m3 also includes money market fund shares, which account for around 4 %