s stimulus measures formulated in fiscal 2016. as these developments show, japan's current economy is supported by multiple factors - - namely, external demand, domestic private demand, and domestic public demand - - in a well - balanced manner. for this reason, it is possible to assess the economy as having resilience to exogenous shocks. another notable feature of japan's economy recently is that the effects of its expansion have been spreading to a wide range of economic entities. the diffusion index ( di ) for business conditions in the tankan ( short - term economic survey of enterprises in japan ) has continued to be positive, not only in large enterprises and manufacturers but also in small enterprises and nonmanufacturers. this is clearly different from the recovery phases in the early and mid - 2000s, which were led by external demand ( chart 4 ). looking at developments by region, the di has been positive for all regions since the december 2013 survey. labor market conditions have tightened nationwide, as seen in the active job openings - to - applicants ratios in many regions having risen to levels comparable to those in major metropolitan areas ( chart 5 ). let me turn to the economic outlook. going forward, japan's economy is expected to continue expanding moderately. the bank makes projections for japan's economic activity and releases them quarterly in the outlook for economic activity and prices ( outlook report ) ; in the latest outlook report released at end - october, the medians of the policy board members'forecasts of the real gdp growth rates for fiscal 2017 and 2018 are 1. 9 percent and 1. 4 percent, respectively. these figures are above japan's potential growth rate, which is estimated to be in the range of 0. 5 - 1. 0 percent. in fiscal 2019, although the growth pace is projected to decelerate, the economy is expected to continue expanding, underpinned by the increase in exports on the back of the growth in overseas economies, and the median of the forecasts of the real gdp growth rate is 0. 7 percent. the economic activity could, of course, deviate either upward or downward from these projections. the biggest risk factor is developments in overseas economies. as i mentioned earlier, the baseline scenario is that overseas economies are expected to continue growing at a moderate pace, and it is no longer the case that risks are likely to be skewed to the downside. that being said, the u. s. economic policies and their impact

ties. it is beyond my ability to judge whether such criticism was justified or not, but it is quite possible that at some stage of economic and social development, factors, such as long - term customer relationships and mutual assistance, do have a role to play in the governance mechanism. the exact form of governance mechanism still varies across societies even in the age of globalization. in reviewing policies and systems, including financial regulation and supervision, it is very important that each jurisdiction strives to find an answer that best fits its own financial and economic structures. see masaaki shirakawa, “ way out of economic and financial crisis : lessons and policy actions ”, speech at japan society in new york ( april 2009 ) for discussion on the so - called “ lost decade ”. 5. towards better financial regulation and supervision vigorous discussions are currently being held in a variety of international forums, including the financial stability board and the basel committee, with a view to reforming the framework of financial regulation and supervision. although the asian financial system remains relatively stable, it cannot be guaranteed immunity from global financial crises, and has actually been significantly impacted by the current crisis. a robust global financial system is a public good that benefits the whole world. this cannot be over - emphasized. in order to prevent another financial crisis, each country should be well aware of this common objective in the first place. efforts should then be made to organize an internationally consistent regulatory and supervisory framework. in making such efforts, we must be very cautious that the reforming of the financial regulatory and supervisory framework is conducted in a well - balanced manner. when we talk about regulation and supervision, we should not confine the discussion within the sphere of regulation and supervision itself. we should rather keep our eyes on its wider context. when we embark on regulatory and supervisory reform, i believe, it is very important to strike the right balance in a number of dimensions as follows. balance between macroeconomic policy and financial regulation and supervision first, balance is needed between macroeconomic policy, particularly monetary policy on the one hand, and financial regulation and supervision on the other. in recent years, there has been a growing tendency among academics and central bankers to draw a clear line between the role of monetary policy and that of supervision and regulation : namely, monetary policy should aim at price stability, and regulation and supervision should aim at financial system stability. however, what we actually witnessed during the credit booming period was an unwelcome combination of asset prices increase, rapid credit expansion, and