If Japanese firms change their products in responding to such increase in the potential demand, their efforts should slow the reductions in the potential growth rate. The fourth factor arising from demographic changes could come into play through fiscal balance (Chart 11). Rapid population aging is the dominant factor in increasing a fiscal deficit.
BIS central bankers’ speeches  1  Still, many observers have their doubts whether Asian economies can meet all their funding needs – in particular as banks in some countries ran up huge volumes of non-performing loans and seem to be constrained when it comes to financing new projects.