The concern is how these developments will affect the momentum of the self-sustained economic recovery in 1998. At present, corporate profits and employment income, which form the basis of the self-sustained recovery, continue to be on an upward trend. Therefore, it is unlikely that the economy has entered a recession.
However, there is some weakening of the virtuous circle of production, income, and expenditure, and if this trend continues, it may undermine the strength of the self-sustained recovery. The Bank will therefore continue closely to monitor the pace of recovery in consumption, progress in inventory adjustment, and developments in household and corporate sentiment. Meanwhile, prices have remained stable on the whole.