This consists mainly of demand for services, including inbound tourism, and business fixed investment. The economy is expected to continue recovering moderately until around the middle of fiscal 2023, mainly due to such materialization of pent-up demand.
Thereafter, the main driver of improvement in the economy is expected to shift from pent-up demand to a more sustainable factor of a virtuous cycle from income to spending. The rate of wage increases in this year's annual spring labor-management wage negotiations appears to be significantly higher than that of last year. This is likely to boost private consumption through improvement in household incomes.