Therefore, there will be no need to change the medium-term scenario. However, diffusion indexes (DIs) of the Economy Watchers Survey, which is a leading indicator of the short-term economic trend, declined to the lowest level since immediately after the consumption tax hike in 2014 on a seasonally-adjusted basis because of the impact of the earthquake in Kumamoto, among other factors.
Regarding the medium-term scenario, while Japan’s potential growth rate continues to slump in the range of 0.0-0.5 percent due in part to the sluggishness of capital stock accumulation, the world economy lacks momentum as I mentioned earlier. I therefore am somewhat cautious about the outlook compared with the Bank’s baseline scenario in the April 2016 Outlook for Economic Activity and Prices (Outlook Report).