Operating Environment
During fiscal 2000, Japan’s economy continued to make a gradual, self-sustained recovery, driven mainly by on private-sector capital investment. However, employment conditions remained harsh and consumer spending flat. Production weakened visibly and the economy marked time, reflecting the deceleration of the U.S. economy from the latter half of 2000, the slowdown in exports to the United States and East Asia, and the drop in share prices. There were also signs that corporate earnings and capital spending, which had begun to firm up, were slackening off once again.
   In an effort to improve the situation and cope with the share price decline brought about by the deceleration of the U.S. economy and the deflationary pressures in the domestic economy, the Bank of Japan returned to its de facto zero interest rate policy after a short time, lowering the official discount rate twice. In addition, it embarked on a number of quantitative monetary easing policies. When the government issued its emergency economic stimulus measures, it announced its intention to carry out radical structural reform of the Japanese economy, including disposing of non-performing loans.
   During the term under review, major changes occurred in the financial environment, from the formation of four groups of major money center banks, to the entry into banking of companies from other industries.

The Economy of Nagasaki Prefecture
The following economic trends were apparent in Nagasaki Prefecture during the year under review. In the private sector, sales of goods such as personal computers and mobile phones in the electronics and other information technology industries moved in a favorable direction against a background of vigorous demand, but fewer orders were received by the core industry, shipbuilding, due to price wars with overseas companies. In the fisheries industry, poor catches and decreased consumption meant that fewer fish could be sold and total sales of fish declined below the figure for the previous fiscal year. The environment was just as severe in the tourism industry. Although the 400th anniversary celebrations commemorating the birth of relations between Japan and The Netherlands were brought off successfully, resulting in a general increase in the numbers of guests at hotels and other accommodation facilities, the situation remained severe, and several large-scale hotels went out of business.
    The general picture remained bleak in consumer spending as well, especially for clothing and household items, despite the fact that it increased on items such as personal computers, digital technology goods, and automobiles, and there were more openings of large-scale commercial facilities.
    During the term under review, although individual industries differed in their performance, the overall economic situation of Nagasaki Prefecture remained difficult.

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