With regard to the outlook, Japan’s economy is expected to return to a moderate recovery path, mainly against the background that domestic demand increases its resilience due to the effects of monetary easing as well as various economic measures, and that growth rates of overseas economies gradually pick up, albeit moderately. Meanwhile, financial conditions are accommodative.
The monetary base has increased significantly as asset purchases by the Bank of Japan have progressed, and firms’ funding costs have been hovering at low levels. The year-on-year rate of increase in the amount outstanding of bank lending has been at around 2 percent, mainly due to increased demand for working capital and funds related to mergers and acquisitions.