##rakawa, together with mr. maehara ( minister of state for economic and fiscal policy ) and mr. jojima ( minister of finance ), is very significant. given that deflation is a long - standing, structural challenge, it is important that both the bank and the government confirm their mutual understanding of the causes of deflation and measures to overcome it. on the one hand, the bank will continue to pursue its cpi - based inflation goal of 1 percent annually, given that the medium - to long - term price stability goal is set within 2 percent annual inflation. a monetary easing policy – based on the virtually zero interest policy and the asset purchase program – will be pursued until the 1 percent inflation goal is in sight. simultaneously, the government is expected to vigorously promote measures to help reduce structural constraints and thus strengthen japan ’ s growth potential. i personally believe that this statement signals to the public a strong will on both sides to overcome deflation and restore sustainable economic growth with price stability. therefore, i regard this action positively. c. outlook for economic activity and prices : a baseline scenario outlook for economy japan ’ s economy grew at a rate of about 3 percent in the first half of 2012, as domestic demand remained firm, while both public and private reconstruction - related demand increased following the great east japan earthquake. since then, the economy has weakened somewhat, as shown by a marked decline in exports and industrial production. this reflects weakened demand from overseas economies – especially exports destined for for example, see shirai, sayuri, “ have demographic changes affected japan ’ s macroeconomic performance? – some implications for monetary policy –, ” speeches at the bank of finland, the riksbank, and stockholm university, bank of japan, 2012. bis central bankers ’ speeches the european union ( eu ) and china. the implications of recent developments in the relations between japan and china have affected japan ’ s economy in areas such as trade and tourism. moreover, weakness in the manufacturing sector has gradually affected employment, as seen in a decline in overtime and the number of new job offers in the sector. private consumption has also lost some of its momentum compared with the period leading up to early summer, partly because of the ending of subsidies for purchasers of environmentally friendly cars. as for business fixed investment, firms ’ investment plans for fiscal 2012 as revealed in the september tankan ( short - term economic survey of enterprises in japan ) – a survey conducted by the bank – indicate relatively high growth for that time

sayuri shirai : demographic changes in asia and japan ’ s economic and financial developments speech by ms sayuri shirai, member of the policy board of the bank of japan, at a meeting with business leaders, kumamoto, 29 november 2012. * i. * * introduction good morning, everyone. my name is sayuri shirai, and i am a policy board member of the bank of japan. i am deeply honored to be able to speak to all of you, as you represent the administrative, economic, and financial communities in kumamoto prefecture. first, let me briefly outline the content of my presentation. it will be divided into two parts. in the first part, i will focus on the current demographic situation and review demographic changes in japan and other asian economies, as well as associated trends in household consumption patterns. after giving this background, the second part of my presentation will summarize japan ’ s recent economic developments and price movements, as well as monetary policy and related issues. after i finish, i am looking forward to exchanging views with you about my presentation, economic performance in the region, and measures undertaken to revitalize the economy. ii. economic growth and demographic changes in asia as we are all aware, japan is a society with a rapidly - aging population caused mainly by a low birth rate. it is also increasingly recognized that other asian economies are soon about to follow japan ’ s path. therefore, i would like to look at this issue today and talk about demographic change, as well as the demographic outlook in the region over the next few decades. a. demographic dividend and demographic burden the world is increasingly concerned with demographic issues. this is because demographic changes are closely associated with national living standards and economic growth. to understand the connection between living standards and economic growth, let us consider a hypothetical country in the early stage of economic development. generally speaking, a country with low living standards and an inadequate medical and welfare services system tends to face slow population growth largely due to high fertility counteracted by high child mortality rates. as the economy gradually develops, the country is likely to experience a decline in the child mortality rate and resultant rapid growth in the “ youth population ” ( those aged below 15 ). subsequently, further growth of per capita income will reduce the fertility rate. when the fertility rate first begins to decline, a country generally has an abundance of relatively young workers, and the growth rate of the “ working - age population ” ( aged 15 to