Domestic demand is likely to follow an uptrend on the back of highly accommodative financial conditions and fiscal spending through the government's large-scale stimulus measures. Exports are expected to continue their moderate increasing trend along with the growth in overseas economies.
Reflecting this outlook, Japan's economy is likely to maintain growth during this projection period at a pace above its potential, mainly through fiscal 2018. In fiscal 2019, it is expected to continue expanding, although the growth pace is projected to decelerate due to a cyclical slowdown in business fixed investment and the effects of the consumption tax hike scheduled in October 2019.