While domestic demand has been firm, growth in external demand has been sluggish, reflecting the deceleration of the global economy – caused by the European economy’s stagnation due to the European debt problem, a slowdown in the Chinese economy due to monetary tightening, and the flooding in Thailand – as well as the continued appreciation of the yen.
As a result, Japan’s economic activity as a whole has remained more or less flat. However, it is expected that the pace of recovery in overseas economies will pick up slowly, led by emerging economies, and reconstruction-related demand after the Great East Japan Earthquake in March 2011 will gradually increase.