bank of japan ’ s march report of recent economic and financial developments1 bank of japan, 22 march 2002 * the bank ’ s view * * japan ’ s economy still continues to deteriorate as a whole, although the downward pressure from exports and inventories is gradually abating. with regard to final demand, the decline in net exports ( real exports minus real imports ) has almost ceased amid the improvement in exporting conditions. meanwhile, business fixed investment continues to decrease and private consumption remains weak. moreover, housing investment remains sluggish and public investment is also declining. to be sure, final demand overall is still weak, but exports — which have a relatively large impact on production — have recently stopped declining. also, inventory adjustment is progressing further in many industries including electronic parts due to the continued production cutbacks to date. reflecting these developments, the decline in industrial production is moderating further. however, firms maintain their stance on reducing personnel expenses under strong excessiveness in employment. under this situation, the severity of employment and income conditions of households is rather intensifying, with unemployment being on a rising trend and the rate of decline in wages expanding. turning to the outlook, as for exporting conditions, the synchronized inventory adjustment in it - related goods worldwide is nearing an end. under this condition, the east asian economies appear to have hit bottom. as for the u. s., the possibility is increasing that the economy will recover since household spending remains solid and inventory adjustment has almost finished, although there still remain uncertain factors. furthermore, the yen is at low levels compared to last autumn. under these circumstances, exports are expected to turn up toward the middle of this year. still, the pace of recovery in exports will be modest, while the anticipated expansion in overseas economies is only gradual and final demand for it - related goods worldwide remains stagnant for the time being. meanwhile, with respect to domestic demand, business fixed investment is expected to follow a downtrend reflecting the fall in corporate profits. private consumption is also likely to remain lackluster mainly due to worsening employment and income conditions. while domestic private demand generally weakens as mentioned above, government spending is basically projected to follow a downward trend. consequently, it may take quite a while for economic activity as a whole to stop declining, even though the decrease in industrial production may come to an end against the background of the improvement in exporting conditions and completion of inventory adjustment. overall, the economic deterioration in japan is

of sterling against the euro adversely affect uk - orientated irish exporters. these factors explain why we have materially revised our growth forecasts for 2016 and 2017. while the irish economy has become less reliant on the uk for trade over recent decades, the uk remains an important market for many indigenous firms, with the agri - food and tourism sectors especially exposed. at the same time, it is important to put the the recent depreciation of sterling against the euro into context, since it can also be interpreted as an unwinding of the bilateral appreciation that began in summer 2014 : the current £ / € rate ( 0. 84 ) is remarkably close to the average rate between the start of 2009 and summer 2014 ( 0. 85 ). still, the £ / € rate remains considerably weaker compared to pre - crisis patterns : the average £ / € rate between 1999 and summer 2007 was 0. 67. despite some initial fears, we have yet to see the operation of more powerful transmission mechanisms by which brexit triggers a more general international decline in confidence indicators and / or initiates a " risk off " phase in the international financial system that would involve a general repricing of risk premia, a decline in asset values and a tightening in financial conditions. rather, the international markets have initially focused on the likelihood of a prolongation of low policy rates, with a visible drop in the yields in many sovereign bond markets ( and a related reduction in bank equity values ). while financial contagion channels have not been strongly operative during the initial postbrexit period, the gradual crystallisation of the prospective new relationship between the uk and the eu over the coming months carries the continuous risk of triggering adverse market developments if a “ harder ” form of brexit emerges as the more likely final outcome. moreover, in view of its tight economic and financial linkages to the uk and its high levels of private and public sector debt, ireland is especially vulnerable to any brexit - related reversal in international financial sentiment. bis central bankers ’ speeches there is also an active debate about the implications of brexit for the configuration of the european financial sector. the impact on the geographical choices of producers of international financial services depends on a wide array of factors, including the accumulated track records as financial centers, the nature of national legal and tax systems, the relative levels of operating costs, transport links, and the relative attractiveness of different cities to the families of internationally