While both exports and imports will expand reflecting the progress in international division of labor, net exports are expected to continue increasing owing partly to the yen’s depreciation since mid1995.
With respect to the growth of domestic private demand, corporate profits of large manufacturing firms are improving steadily, helped partly by the positive effects on export prices and export volume stimulated by the yen’s depreciation. Recovery in corporate profits has spread to nonmanufacturing firms which are closely related to business activities, as well as BIS Review 47/1997  -2-  to small manufacturing firms.