volatility in asset markets and providing continued support for positive economic activity. in deciding these policy measures, the bank brought forward the march monetary policy meeting ( mpm ). at an unscheduled mpm on may 22, the bank decided on such measures as the introduction of a new fund - provisioning measure to support financing mainly of small and medium - sized firms. deputy prime minister and finance minister aso and bank of japan governor kuroda then released a statement together, communicating to the public at home and abroad that the government and the bank " are committed to making every effort to facilitate corporate financing and maintain stability in financial markets... and doing whatever it takes to settle the situation, and will work together to bring the japanese economy back again on the post - pandemic solid growth track. " i believe that the clear stance of the government and the bank has helped build a sense of assurance regarding the outlook for japan's economy. b. reflections on policy effects the policy responses undertaken to date by the government and the bank have generally been effective. this is indicated by the fact that the rise in the number of unemployed and corporate bankruptcies has so far been limited, despite economic activity being rapidly and significantly depressed due to the impact of covid - 19. for example, the bank's estimate of the output gap in japan's economy for the april - june quarter this year was minus 4. 83 percent, the largest negative figure since the minus 5. 40 percent for the january - march quarter of 2009, immediately after the global financial crisis ( gfc ), and the minus 5. 53 percent for the quarter following that. this is because working hours and capital utilization rates declined sharply against the background of the spread of covid - 19 and preventive measures strongly constraining firms'and households'economic activities. even though the figures for the output gap show that the extent of deterioration in economic activity this time has generally been the same as at the time of the gfc, the degree of employment adjustments has remained relatively small so far. this seems attributable to the fact that increases in corporate bankruptcies, discontinuation of businesses, and unemployment have been constrained to some extent, due to the swift implementation of various policy responses, such as the expansion of employment adjustment subsidies and support for financing. iii. japan's economy in the covid - 19 era a. from waiting for the pandemic to end, to learning to

growth recorded a more than 10 percent decline on an annualized basis for two consecutive quarters in the october - december quarter of last year and the january - march quarter of this year. the reason why economic conditions deteriorated in japan more seriously than those in other countries was that the high - tech manufacturing industries including automobiles, electrical machinery, and general machinery, which benefited from the recent high growth of the global economy, had a high share in japan's economy. a fall in global demand especially for durable goods and capital goods owing to the rapid contraction of global economic activity directly hit those industries, resulting in a substantial decline in exports and production. since this spring, as the " acute pain " of the global economy has started to dissipate, there has been a reversal of the mechanism which i have just mentioned. that was illustrated by the april - june real gdp growth rate of 3. 7 percent, on an annualized basis, which was the highest growth in the g - 7 countries. with progress having already been made in inventory adjustments both at home and abroad, the recovery in exports and production has increasingly become obvious, centering on automobiles and electronic parts. in particular, against a backdrop of china's strong demand for electrical appliances, exports to east asia first rebounded early this spring. signs of improvement remain observed not only in the real economy, but also in corporate financing. the issuing rates of cp and corporate bonds, which surged from last autumn, have declined to the levels seen before the collapse of lehman brothers. while only a handful of firms with high ratings could issue corporate bonds up to the end of last year, the situation improved significantly such that the issuance was a record high this june. firms'financial positions have continued to improve particularly at large firms. while some yelps were once heard from firms'managers and treasurers on their financial positions, they seem to have materially regained their composure recently, albeit still not being able to dispel uncertainty about the future outlook. looking ahead, japan's exports are expected to continue to increase as the overseas economies start recovering. the resultant recovery in corporate profits and the effects of various policy measures will likely bring about a gradual recovery in business fixed investment and private consumption. therefore, the bank's baseline scenario is that " japan's economy will start recovering from the latter half of fiscal 2009. " however, i will hasten to add that the bank judges that the pace of recovery is highly likely to be only moderate