toshihiko fukui : the japanese economy summary of remarks by mr toshihiko fukui, governor of the bank of japan, at the national securities industry convention, tokyo, 18 september 2003. * * * as you are aware, economic activity in japan continues to be virtually flat. recently, however, some signs of apparent recovery are being observed. business fixed investment is recovering gradually against the background of an upturn in corporate performance - - a trend evident particularly among large manufacturers. as for the export environment, the likelihood is gradually increasing that the growth rate of the u. s. economy will accelerate and that the east asian economies as a whole will resume a growth trend. furthermore, business and household sentiment is getting a boost from the substantial rise in stock prices from their low levels during the early spring. thus, it is likely that exports and production will gradually resume an upward trend, triggering a virtuous circle leading to a moderate self - sustained recovery in domestic demand. the extent and strength of recovery based on this scenario of export and production growth need to be monitored closely, as they could be affected adversely by ongoing structural adjustments, such as firms'reduction of excess debts and labor costs. with regard to financial markets, long - term interest rates are increasing along with the rise in stock prices. long - term rates normally move in response to market participants'prospects for the economy. in the short term, however, they may move erratically in response to various other factors. the bank of japan, for its part, will monitor closely the overall trend of financial markets, watching, for example, any developments in long - term rates that are not in line with economic activity. next i will touch on the bank's monetary policy. the bank has provided liquidity in a flexible and proactive manner in response to various cases of rising uncertainty under the framework of quantitative monetary easing. as a result, i believe the bank has been able to prevent various risk factors from exerting a negative impact on the economy through heightened liquidity concerns. needless to say, the bank will do its utmost to support the japanese economy. it will maintain the policy of quantitative monetary easing to ensure the progress of economic recovery, supplying sufficient liquidity and strengthening the working of the transmission mechanism of monetary easing. the bank remains firmly committed to maintaining the current quantitative easing policy until the yearon - year increase in the consumer price index ( cpi ) becomes stably zero or above. this is a

disaggregation ( 1 ) ( annual change, percent ) 6. 0 6. 0 5. 5 5. 5 5. 0 4. 5 4. 0 3. 5 3. 0 cpi services cpiefe goods - 1 2. 5 - 1 indexed and / or regulated 4. 5 4. 0 other 3. 5 services excluding foodstuffs and energy 5. 0 3. 0 2. 5 figure 8 cpi inflation forecast ( * ) ( annual change, percent ) cpiefe inflation forecast ( * ) ( annual change, percent ) sep. 18 mp report 6 6 5 5 4 4 3 3 sep. 18 mp report dec. 18 2 2 mp report 1 1 dec. 18 2 mp report 1 0 0 11 12 13 14 15 16 17 18 19 20 11 12 13 14 15 16 17 18 19 20 ( * ) gray area, as from fourth quarter 2018, shows forecast. sources : central bank of chile and national statistics institute ( ine ). figure 9 employment ( annual change, percent ) afp afc total employment salaried employment - 2 - 2 - 4 - 4 ( 1 ) number of employed pension fund ( afp ) contributors, ( 2 ) number of unemployment insurance ( afc ) contributors. sources : central bank of chile, national statistics institute ( ine ) and superintendence of pensions. table 1 domestic scenario ( annual change, percent ) 2018 ( f ) 2019 ( f ) 2020 ( f ) sep. 18 mp dec. 18 mp sep. 18 mp dec. 18 mp jun. 18 mp dec. 18 mp report report report report report report gdp mining gdp non - mining gdp domestic demand domestic demand ( w / o inventory change ) gross fixed capital formation total consumption goods and services exports goods and services imports current account ( % of gdp ) gross national savings ( % of gdp ) nominal gross fixed capital formation ( % of gdp ) 1. 5 - 2. 0 1. 8 3. 1 1. 8 - 1. 1 2. 7 - 0. 9 4. 7 - 1. 5 20. 6 21. 6 4. 0 - 4. 5 4. 0 3. 25 - 4. 25 3. 25 - 4. 25 2. 75 - 3. 75 2. 75 - 3. 75 4. 6 4. 1 5. 0 3. 8 4. 9 6. 2 - 2. 2 20. 3 21. 7 4. 7 4. 0 5. 5 3. 6 4.