However, while credit concerns are real, the weakened state of the economy and the resulting drop in demand for their products and services appear to be the more serious challenge for small businesses in the current environment.
With regard to prices, wholesale prices are on a downtrend, and consumer prices are lowering below the previous year’s level. With respect to the outlook, the downward pressure from domestic factors is unlikely to weaken considerably reflecting the already large output gap, despite the expected effects of the comprehensive economic stimulus package. Hence, prices are likely to be weak for some time.