As with every economy, there are also some negative aspects: domestic economic growth has been weaker on a per capita basis; slow global growth and rising protectionism creates risks for our export sector; the global dairy market has serious oversupply problems that depress our dairy returns (although the last two dairy auctions have been encouraging); excessive house price inflation is creating financial stability risks; our exchange rate is too high and affecting the competitiveness of our export and import substitution industries; and headline inflation (but not underlying inflation) lies below the target band in the Policy Targets Agreement.
Looking at real GDP data, Japan recorded the largest decline by 1.9 percent in the first quarter of 1998, but, in the recent global financial crisis, even the United States, which showed the smallest decline after the failure of Lehman Brothers, registered the huge decline by 3.0 percent during the period from the fourth quarter of 2008 to the first quarter of 2009 (Chart 3).