year record high of 9. 0 % in september. meanwhile, short - term inflation expectations among the general public have also steadily risen from the mid - 2 % level at the beginning of the year to the mid - to - upper - 4 % level in july. however, it has recently been fluctuating at a somewhat lower level. in contrast to this, long - term inflation expectations remain relatively stable near the inflation target of 2 %. going forward, consumer price inflation will likely remain at around 5 % for some time. however, inflation is expected to slow gradually due to heightened economic downward pressures at home and abroad, and show a further gradual decline next year, resulting 1 / 3 bis - central bankers'speeches in a pattern of a high - pace first half and a low - pace second half. however, concerning the pace of these developments, there are great uncertainties surrounding growth at home and abroad, and oil price movements. a detailed look at factors behind these uncertainties suggests that, first, various upside risks could deter the pace of this slowdown. in the international energy markets, for example, there are significant risk factors, such as a production cut by opec + and stronger sanctions on russia. still, high inflation expectations can affect wage and price setting and heighten the persistence of the current high inflation. furthermore, the size of the increase in electricity bills next year will significantly reflect the burden of rising costs accumulated so far, and is highly likely to be larger than what is reflected in our november forecast. meanwhile, we cannot rule out the possibility of a steeper slowdown in inflation. first, international oil prices have recently fallen to the 70 - dollar range due mainly to concerns about a global economic slowdown, significantly below the assumption made in our november forecast. demand - side downside pressures could also increase further, in line with an accelerated slowdown in the domestic and global economy and a contraction in real estate market activity. meanwhile, the easing of containment measures in china could act as both upward and downward pressures on inflation here, depending on whether it succeeds or not. if successful, a chinese economic recovery would pick up, which could boost international commodity prices. on the other hand, if the situation worsens, any recovery in the chinese economy would be delayed, which could aggravate the downward trend in energy prices. moreover, the possibility has been raised that changes in economic and labor market conditions may transmit differently to prices in comparison to the past. unlike in periods

moreover, in the course of export - led growth centering around the manufacturing industry, sectoral imbalances have built up - between the manufacturing and the service industries, and between exports and domestic demand - and these are becoming obstacles to sustainable growth. for this reason, skeptical views about the asian economy ’ s future are also emerging in some corners. given this mix of expectations and concerns for the asian economy ’ s future, i think we can see the conference here this week as a very timely and meaningful one, in having brought together many great scholars and policy authorities from around the world, to consider the possibility of sustainable economic growth in asia and soberly discuss the future challenges and policy responses. 1 / 3 before discussions begin here today, i would like to say just a few words about some of the challenging tasks now confronting the asian economy. the first task is to change our growth paradigm. going forward we will have to break out of the paradigm of extensive growth based on the expansion of production factor inputs, and move to one of intensive growth driven by innovation. productivity in major asian countries has already clearly slowed since the global financial crisis. and in response, we need to design a scheme of social and economic incentives to modernize the old systems and practices now blocking higher productivity growth, and to stimulate innovation. it will also be very important to promote fair competition and revitalize r & d investment, through the restraint of rent seeking and the easing of regulations, and to discover thereby new technologies and new engines of growth. the second task is to push ahead with economic rebalancing. we need to move from export - led growth to growth characterized by a balance between exports and domestic demand. to boost domestic demand, we need to build a virtuous cycle between growth, employment, and domestic demand by actively nurturing smes and service businesses that contribute greatly to job creation. macroeconomic policy can also be utilized to support the domestic demand expansion. but we should bear in mind that, if expansionary fiscal and monetary policy stances become even a bit prolonged or excessive, this can undermine fiscal soundness and cause a buildup of financial imbalances. it will thus be necessary, while focusing on sustainability from the medium - to longterm perspective, to implement our monetary, fiscal and macroprudential policies harmoniously, along with our micro - structural reform policies. the third challenging task facing the asian economy is our response to population aging. even if we succeed in shifting the