However, there exists a risk that the prolonged downturn in U.S. private consumption affected by the terrorist attacks would induce another round of adjustments in the Japanese economy, starting from the decline in exports such as of consumer goods. Under these circumstances for exports, uncertainty toward the economy is growing further.
Meanwhile, with respect to domestic demand, business fixed investment is expected to follow a downward trend judged not only from the continuous decline in corporate profits, but also from the successive downward revisions of firms’ investment plans in the IT-related sector. Private consumption is likely to weaken gradually along with the deteriorating employment and income conditions.