That view probably more or less coincides with your concern. With that, I will move on to discuss Japan’s medium- to long-term growth. The average annual growth rate of Japan’s economy declined significantly from around 5 percent in the 1970s, in the range of 4–5 percent in the 1980s, to around 1.5 percent in the 1990s, and below 1 percent in the 2000s.
When the growth rate trends downward in that manner, firms’ and households’ expectations for future growth and future income growth will decline and therefore firms and households will become cautious about their investment and consumption. That has caused a protracted demand shortage in the economy and has become a fundamental cause for deflation.