However, given that the drop in demand after the financial crisis was considerable and the pace of economic recovery has been moderate, the pace of improvement in the supply and demand balance is likely to remain moderate, and the timing of the year-on-year rate of change in the CPI entering the positive territory is likely to be sometime in fiscal 2011.
As the rate of growth for the fiscal year, following 0.1 percent in fiscal 2011, the pace of growth is expected to increase to 0.6 percent in fiscal 2012. While taking some more time, Japan’s economy is expected to steadily move toward the sustainable growth path with price stability. The outlook for economic activity and prices is associated with various risk factors.