D.  Upside and downside risks to the baseline scenario of the outlook  The baseline scenario I just presented is subject to various upside and downside risks, which warrant attention. First, there is a high degree of uncertainty – both on the upside and on the downside – about the effects of the earthquake on Japan’s economy.
In addition, if firms and households were to maintain an overly pessimistic view regarding the outlook for Japan’s economy, domestic demand – such as business fixed investment and private consumption – could be restrained over the medium to long term, posing the risk of a decline in the expected growth rate of the economy.