) household savings that have accumulated as a consequence of the significant reduction in consumption opportunities for face - to - face services, due mainly to governments'implementation of pandemic - related restrictions. in addition, in the united states, for instance, higher prices of such assets as equities and homes have brought about increases in unrealized gains on household assets. this can be noted as a factor that has contributed to underpinning private consumption. the second factor is buoyant demand for business fixed investment. this is in reflection of an increase in investment intended to, for example, facilitate digital transformation ( dx ) and address climate change. let me now take a look at japan's economy from the viewpoint of the two commonalities i have just described. with respect to the first factor, or pent - up demand, this materialized after the sixth wave of covid - 19 seen at the beginning of 2022 abated, and in turn helped raise the economic growth rate. subsequently, although such demand weakened somewhat during the seventh wave, it likely contributed to underpinning economic activity ( chart 3 ). as for the second factor, or demand for business fixed investment, the plans presented in various survey results suggest that there continue to be strong expectations that fixed investment will serve as a driving force for a virtuous cycle in japan's economy. mainly due to the effects of supply - side constraints associated with the pandemic, fixed investment continues to be lower than firms'initial plans ; however, plans that have been postponed will likely be put into place in tandem with the waning impact of covid - 19 ( chart 4 ). i would now like to briefly touch on japan's exports. with global business sentiment having been firm during the course of recovery from the pandemic, exports from japan basically remain steady ( charts 5 and 6 ). however, imports have increased significantly due to a surge in prices of crude oil and other raw materials, and the balance on goods continues to register a deficit ; currently, a worsening in terms of cross - country transactions when seen from the viewpoint of japan's overall economy - - that is, deterioration in the terms of trade - - is causing an outflow of income from japan. japan's overall economy, despite being affected by factors such as a rise in commodity prices, seems to have picked up as the resumption of economic activity has progressed while public health has been protected from covid - 19

emerging and commodity - exporting economies are likely to become the engines of global economic growth. although expectations are high for emerging and commodity - exporting economies, it remains to be seen how strong an engine they can actually be given the various uncertainties. b. the japanese economy the japanese economy slowed temporarily following the great east japan earthquake in march 2011. subsequently, strenuous efforts were made by firms to rebuild supply chains, helping the economy to recover by around the summer of 2011 despite constraints to the supply of electricity. since autumn 2011, exports and production have been under pressure from a further negative shock in the form of the flooding in thailand, adding to the european debt problem and the effects of the appreciation of the yen. private consumption remained firm, due in part to a recovery in demand that had been restrained after the earthquake, while business fixed investment has been on a moderate increasing trend, aided partly by the restoration of disaster - stricken facilities. as a result, the japanese economy has been more or less flat, caught between both negative and positive factors. real gdp growth in fiscal 2011 is likely to be slightly negative mainly due to the effects of the supply - side constraints caused by the disaster as well as the slowdown in overseas economies and the appreciation of the yen. restoring the national finances is also one of the major issues japan currently faces. the situation in europe, where fiscal risks have materialized, cannot be considered merely a “ fire on the other side of the river. ” a look at japan ’ s fiscal situation shows that its primary budget deficit is similar to those of spain and portugal, while its outstanding debt is extremely large, be it on a gross or a net basis, that is, offsetting financial assets held by the government. some argue that there is little reason to worry as the share of japanese government bonds ( jgbs ) held by foreign investors is low compared to the share of european and u. s. government bonds held by foreign investors. and in fact, government bond prices are not weak – long - term interest rates are not rising – at present. however, a lesson to be learned from the european debt problem is that once trust in a country ’ s fiscal management wanes, this can soon lead to a loss of confidence in government bonds as a safe asset. although to date there has been little difficulty in finding buyers for jgbs, this may not hold true in the future. confidence in jgbs could change in a non - linear fashion and government