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Forecast for the Japanese Economy In Fiscal 2002 and Fiscal 2003: September 2002

Summary

1. Current State of the Japanese Economy

2. Outlook for Fiscal 2002 and Fiscal 2003

1. Fiscal 2002 (Real GDP: +0.4%; Nominal GDP: -0.7%) Possibility of Low, but Positive, Real Growth

2. Fiscal 2003 (Real GDP: +1.2%; Nominal GDP: +0.5%) Positive Growth Will Continue but Will Slow in the Latter Half

3. Outlook for Components of Final Demand

1. Assumptions Underlying the Forecast

a. World Economy

b. Exchange Rates

c. Crude Oil Prices (West Texas Intermediate (WTI), following month futures price)

d. Government Fiscal Policy

e. Tax Reform

f. Monetary Policy

2. Trends in Demand by Category

a. Exports Will Remain at a High Level, and Recovery Will Be Led by External Demand. The Contribution of the External Sector Will Gradually Diminish as Imports Expand.

b. Corporate Sector to Remain Firm but Slow in the Latter Half of Fiscal 2003

c. The Employment Environment Will Improve, but Recovery in the Household Sector Will Be Marginal.

d. Public Works Investment to Continue on a Downward Trend

e. Price Levels: Easing of Deflationary Pressures Likely to Be Temporary

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