and their effects, ( 4 ) prospects regarding the european debt problem, including the financial sector, and ( 5 ) geopolitical risks. i hold the view that it is important to stay vigilant regarding these risk factors, especially now that the growth rates of overseas economies are rising. b. japan's economy and prices 1. economic activity i will now discuss the economic situation in japan given the overseas developments i have just outlined. japan's economy is expanding moderately, with a virtuous cycle from income to spending operating. for the first time in about 11 years, real gdp registered positive growth for five consecutive quarters, through the january - march quarter of 2017 ; by component, demand both at home and abroad has increased and the economy has been growing at a pace slightly above its potential, which is estimated to be in the range of 0. 5 - 1. 0 percent. 1 with regard to the outlook, japan's economy is likely to continue its moderate expansion. through fiscal 2018, domestic demand is likely to follow an uptrend, with a virtuous cycle from income to spending being maintained in both the corporate and household sectors, on the back of highly accommodative financial conditions and fiscal spending through the government's large - scale stimulus measures. meanwhile, exports are expected to continue their moderate increasing trend as the growth rates of overseas economies increase moderately. in fiscal 2019, the economy is expected to continue expanding, supported by external demand, although the growth pace is projected to decelerate due to a slowdown in under a specific methodology, japan's potential growth rate is estimated to be in the range of 0. 5 - 1. 0 percent. however, the estimate of the potential growth rate varies depending on the methodologies employed and could be revised as the sample period becomes longer over time. thus, it should be regarded as being subject to a considerable margin of error. domestic demand. 2 according to the july 2017 outlook for economic activity and prices ( hereafter the outlook report ), released by the bank of japan, the medians of the policy board members'forecasts of the economic growth rate are 1. 8 percent for fiscal 2017, 1. 4 percent for fiscal 2018, and 0. 7 percent for fiscal 2019. 2. prices next, i will talk about price developments. the year - on - year rate of change in the consumer price index ( cpi ) for all items less fresh food is in the range of 0

will explore new demand, and at the same time expand the channels for capturing demand in neighboring economies. japan's economy has made progress toward this end for many years despite the severe situation for the management of firms, and has exhibited strong compatibility. it is expected to make continued progress in the future. currently, financial conditions are highly accommodative and labor market conditions are tight. it is a good time to proceed with the structural reform and growth strategy, and we should not miss this chance. i consider that the private sector, which plays the main role in the economy, should take the initiative to enhance productivity and create demand in a more proactive manner. financial institutions are expected to provide consulting services to their counterpart firms making these efforts. in particular, in rural areas, financial institutions, which are endowed with information, knowledge, and experience, not to mention personnel, are expected to take such initiative. moreover, it is a highly difficult task to increase labor input in the current situation where labor shortages are becoming severe. however, given that the tightness in labor market conditions varies by industry, the current moderate tightness can be regarded as a chance to increase mobility in the labor market - - including inter - industry labor reallocation - - in wider areas. each firm will need to retrain its management staff to enhance their ability and adjust their mindset. also, measures should be taken to change the decision - making process and reduce operations that do not produce value - added, such as duplicated operations, as well as excessive services. progress toward improving the operation process that will lead to utilization of the workforce of women and the elderly also should be made. in this regard, the bank conducted a survey on firms'efforts toward promoting women's labor force participation by region and released the results as the annex to the regional economic report in june 2017. 4 according to this annex, women's labor participation is increasing in many regions and has led to improvement in business performance and productivity. thank you for your attention. the annex to the regional economic report is available only in japanese.