After three miserable years of below par growth, it is now clear that the world economy has entered a period of improving economic performance. World output is expected to increase by 4.6 percent this year, 50% faster than in the previous two years, while world trade, which practically stagnated in 2001 and 2002, will increase by nearly 8 percent this year.
Reflecting such developments in final demand and continued progress in inventory adjustment, industrial production has stopped decreasing. The deterioration in corporate and consumer sentiment seems to have ceased due to this economic situation as well as the improvements in the financial environment, including the subsidence of the public’s anxiety about the stability of Japan’s financial system and the recovery in stock prices.