Therefore, sluggish credit growth is largely a consequence of limited demand for credit (such as loans to finance business investment and mortgages), as evidenced by the declining trend in new business fixed investment as a percentage of GDP (and cash flow) and the moderate increasing trend in housing investment.
This phenomenon is closely associated with the declining potential (trend) economic growth, long-standing mild deflation, and persistent output gaps. These features characterize the Japanese economy and partially reflect cyclical factors.