If market participants and economic entities factor the risks in to a certain extent, the confidence in the economic outlook going forward would be enhanced, leading to an upswing in economic activity, when (1) the view prevails that the actual impact may not be as significant as envisioned beforehand or (2) the probability of manifestation of these risks lessens.
What happened after the referendum on Brexit is a case in point. Therefore, we should monitor developments in overseas economies with both upside and downside risks in mind. 4  II. Price Developments and their Outlook Price Developments Next, I will talk about the price developments in Japan.