Those constraints are, however, being relaxed more quickly than expected initially as a result of strenuous efforts by firms. Looking ahead, for the time being, Japan’s economy is likely to continue to be under strong downward pressure, mainly on the production side.
However, as supply-side constraints ease and production regains traction, the economy is expected to return to the moderate recovery path from the second half of fiscal 2011, backed by an increase in exports reflecting the high growth of the global economy and by a rise in demand for restoring capital stock. 1  See Shirakawa (2010).