However, due partly to monetary tightening conducted with a view to containing inflation, recent economic indicators have been showing signs of a slowdown. This can be seen, for example, in the declining trend in China’s manufacturing purchasing managers index. In addition, Japan’s disaster adversely affected ASEAN countries in the April-June quarter.
While the effects of the disaster appear to have almost run their course as of July, external demand might slow down from now on reflecting a slowdown in the recovery in the United States and Europe. Domestic demand is robust, but, given continued concern over inflation, further monetary tightening is necessary.