) geopolitical risks. in particular, uncertainties regarding the effects of protectionist moves have been heightening. as it can be said that the situation surrounding overseas economies is uncertain, it is necessary to stay vigilant regarding these risk factors, including their impact on the sentiment of firms and households in japan. b. japan's economy and prices 1. economic activity i will now discuss the economic situation in japan. the economy has been on a moderate expanding trend, with a virtuous cycle from income to spending operating, although exports, production, and business sentiment have been affected by the slowdown in overseas economies. this is evidenced by the real gdp growth rate having registered 1. 3 percent for the april - june quarter of 2019 on an annualized quarter - on - quarter basis, representing positive growth for three consecutive quarters. while the contribution of net exports on real gdp growth 1 / 5 bis central bankers'speeches has turned negative, that of domestic demand has remained positive. according to the bank of japan's september 2019 tankan ( short - term economic survey of enterprises in japan ) released at the beginning of october, the diffusion index ( di ) for business conditions for all industries and enterprises has remained positive, although the effects of such factors as the slowdown in overseas economies have continued to be observed. with regard to the outlook, japan's economy is likely to continue on a moderate expanding trend on average, although it is projected to be affected by the slowdown in overseas economies for the time being and due attention needs to be paid to the effects of the october 2019 consumption tax hike on private consumption. in terms of specific figures for the economic growth rate, as provided in the july 2019 outlook for economic activity and prices ( outlook report ) released by the bank, the medians of the policy board members'forecasts are 0. 7 percent for fiscal 2019, 0. 9 percent for fiscal 2020, and 1. 1 percent for fiscal 2021. the bank estimates that the economic growth rate that can be achieved in the long term, or the so - called potential growth rate, is in the range of 0. 5 - 1. 0 percent. thus, japan's economy is expected to continue growing at a pace consistent with its potential. to elaborate on japan's economy by demand component, exports are projected to continue showing some weakness for the time being, but thereafter are expected to return to their moderate increasing trend as the growth rates of overseas economies rise. domestic demand

lenders, counselors, community development specialists, and policymakers. we are also concerned about the challenges of neighborhoods that have seen large increases in foreclosures and vacant properties and have begun to work with policymakers, lenders ( including community banks ) and community groups to address these problems. in particular, we have undertaken a joint effort with neighborworks america to help communities develop strategies for neighborhood stabilization. conclusion reducing the rate of preventable foreclosures would promote economic stability for households, neighborhoods, and the nation as a whole. although lenders and servicers have scaled up their efforts and adopted a wider variety of loss - mitigation techniques, more can, and should, be done. the fact that many troubled borrowers have little or no equity suggests that greater use of principal writedowns or short payoffs, perhaps with shared appreciation features, would be in the best interest of both borrowers and lenders. this approach would be facilitated by allowing the fha the flexibility to offer refinancing products to more borrowers. ultimately, though, real relief for the mortgage market requires stabilization, and then recovery, in the nation's housing sector. modernization of the fha would be of help on this front as well. i am sure that the fha and the department of housing and urban development, given the appropriate powers by the congress, will make every effort to expand their operations and to help improve the functioning of the market for home - purchase mortgages. for community bankers, fha modernization and expansion would provide an important opportunity – of which i urge you to take advantage – to better serve your customers and community. the government - sponsored enterprises ( gses ), fannie mae and freddie mac, likewise could do a great deal to address the current problems in housing and the mortgage market. new capital - raising by the gses, together with congressional action to strengthen the supervision of these companies, would allow fannie and freddie to expand significantly the number of new mortgages that they securitize. with few alternative mortgage channels available today, such action would be highly beneficial to the economy. i urge the congress and the gses to take the steps necessary to allow more potential homebuyers access to mortgage credit at reasonable terms.