In addition to the continued expansion of overseas economies, another major factor behind the ongoing recovery is that the corporate sector has essentially completed its adjustments of the "three excesses," namely, production capacity, employment, and debt. In relation to the financial system, it may also be noted that financial institutions have now mostly overcome the nonperforming-loan (NPL) problem and recovered their management stability.
In the corporate sector, corporate profits have increased for three consecutive years since fiscal 2002, and this trend is continuing during fiscal 2005 with the ratio of profits to sales primarily at large firms surpassing the levels recorded during the bubble era.