economic growth is likely to remain firm. the impact of the earthquake on overseas economies generally appears to be limited. led mainly by robust domestic demand, emerging and commodity - exporting economies have continued relatively high growth and are driving global growth. however, in many of these economies, concerns about inflation have been mounting due to the earlier rise in international commodity prices, prompting their central banks to lean toward monetary tightening by, for example, raising policy rates and reserve requirement ratios. china ’ s economy currently continues to grow at a rate of around 9. 0 – 10. 0 percent, while inflation runs at a rate of about 5. 0 – 6. 0 percent, exceeding the government ’ s inflation target of 4 percent. against this background, the people ’ s bank of china recently implemented the fifth increase so far this year of the reserve requirement ratio and strengthened liquidity controls, including setting a ceiling on aggregate credit newly extended by banks, and is strengthening its stance to curb inflation. these measures may dampen economic growth to some extent, but given that china is enjoying a virtuous cycle of growth in exports, production, income, and spending, the economy, on the whole, is likely to continue to grow at a relatively high rate. the u. s. economy has been recovering and is likely to remain on a recovery trend. the seasonally adjusted annualized quarter - on - quarter growth rate of real gdp in the january – march quarter of 2011 was 1. 8 percent. although this is lower than the 3. 1 percent recorded in the preceding quarter, it confirms that, mainly thanks to exports and private consumption, the u. s. economy continues to recover. however, balance - sheet adjustments in the heavily indebted household sector remain a major drag on the economy, the prolonged sluggishness in the housing market persists, and the unemployment rate, which stood at 9. 0 percent in april, is still high. although private - sector employment has continued to trend up, the improvement still lacks the momentum to make up for the approximately 8 million jobs lost since the lehman shock. while the federal reserve has announced that it will end purchases of an additional 600 billion u. s. dollars of treasury securities by the end of june 2011, as scheduled, it also emphasized that it will continue to maintain an accommodative monetary policy stance for an extended period in a situation where the u. s. economy lacks vigor as a whole. european economies as a whole have been

recovering moderately, albeit with some differences in growth by country. while peripheral countries in the euro area are registering low growth, large core economies, such as germany and france, are enjoying steady growth supported by increases in exports, particularly to the emerging economies, and private consumption. as for the outlook, the pace of economic growth in europe as a whole is likely to remain moderate, given that countries in the euro area are implementing austerity bis central bankers ’ speeches programs as part of their fiscal consolidation measures and because of the uncertainties regarding how the debt problems in countries such as greece will develop. in this environment, the european central bank ( ecb ) in april raised its policy rates for the first time since the lehman shock owing mainly to increases in international commodity prices. however, given the major risk factor presented by problems involving the credit risk of government bonds issued by peripheral countries in the euro area, the outlook for european economies, particularly greece, remains highly uncertain. while the issue of fiscal consolidation in europe and the united states has been gaining attention, let me touch upon the fiscal status of japan. although japan has the highest ratio of public debt to gdp among major industrialized countries, yields on japanese government bonds ( jgbs ) have remained stable at low levels. one likely explanation is that jgbs continue to command market confidence, despite japan ’ s grave fiscal situation. fiscal consolidation is not a task that can be achieved over a short period of time. it is therefore important for japan to steadily work on measures aimed at fiscal consolidation while market confidence regarding the creditworthiness of jgbs remains in place. b. japan ’ s economy following a v - shaped recovery after the lehman shock, japan ’ s economy had been on a moderate recovery trend, but the situation changed completely with the earthquake on march 11. the economy is currently facing strong downward pressure, mainly on the production side. although the preliminary results for the industrial production index for april show a small increase of 1. 0 percent from march – mainly due to progress in the restoration of supply chains – the level of production remains at only around 85 percent of that in february, that is, just before the earthquake. automobile production in particular dropped sharply, and the number of passenger cars produced in april marked a year - on - year decline of 60. 2 percent. in these circumstances, real exports have continued to decline, registering a 6. 9 percent fall in april from the previous month, due largely to the substantial decline in automobile