13 Nonetheless, I remain optimistic that deflation can be overcome in the medium term. This is because many Japanese firms are striving to become more innovative and competitive, and to explore new sources of demand, both at home and abroad.
But, we have no evidence that business saving has moved over time to significantly offset the downward trend in household saving. Indeed, the ratio of gross business saving to GDP has risen only about 1 percentage point since the mid-1980s, whereas the decline in personal saving - again relative to GDP - has been about 7 percentage points.