Among these firms, some are aiming to restructure their business strategies from a global viewpoint by acquiring overseas firms, making use of the strong yen. Such a constructive approach could increase corporate confidence and dispel the prevailing sense of gloom, leading possibly to an increase in the expected growth rate.
If, however, firms that are developing business overseas place priority on strengthening overseas production by shifting production abroad and/or closing down domestic bases altogether, the impact on the Japanese economy – and especially the direct impact on subcontractors and sub-subcontractors – would be quite severe because of the large spillover effects from exporters.10 In fact, the Bank’s Regional Economic Report released in October 2010, based on information gathered from its Head Office and branches, highlighted the concern raised by some that increased overseas production was restraining new hiring in Japan.11 Thus, there is a risk that Japan’s expected growth rate will decline unless all economic players take forward-looking action in their respective fields.