Message from the Management

Operating Environment
In fiscal 2001, the Japanese economy further deteriorated, characterized by significant declines in exports and production amid a global economic slowdown cause by falling demand for IT-related products.
   Domestic personal consumption remained generally unchanged, but capital expenditures declined considerably, and corporate bankruptcies moved higher. Meanwhile, unemployment rates rose to unprecedented levels, and progressive price declines sparked growing fears of a deflationary spiral. In response, the national government and the Bank of Japan worked together with firm resolve to halt the deflationary trend, deciding on a number of measures, including an emergency response program and a comprehensive deflation countermeasure package. These actions halted the onslaught of a deflationary spiral. The Bank of Japan also expanded the money supply, which helped stabilize the financial system and prevent further economic slowdown.

Regional Economic Trends
An examination of economic trends prevalent in the Bank’s operational region reveals a high number of orders and equally high levels of productivity in the manufacturing sector, with increased demand for imported energy particularly high among major and medium-sized shipbuilding companies. In digital technology goods, orders for display monitors began to pick up as the level of production in information technology-related industries in general began to gradually climb upwards by the fiscal yearend, the result of substantial progress made in efforts to adjust product inventories throughout the year. By contrast, textiles, ceramics and other traditional industries continue to falter due to the effects of a steady influx of lower-priced imports. In the non-manufacturing sector, sluggish movement in public construction projects, the result of shrinking public investment budgets, led to lower tone overall in construction and related industries. In the fisheries industries, a difficult operating environment continues to persist, the result of sluggish market prices for fish and poor catches in large and medium-sized encircling fishing, the main fishing method used in this region.
   Where consumer spending is concerned, although automobile sales showed relatively strong upward movement, especially for new and subcompact models, demand remained lackluster for clothing and foodstuffs. Demand for PC-related merchandise also become gradually more lethargic during the term.
   In the tourism industry, the number of visitors to the prefecture’s tourist sites and amusement parks during the term under review continued to hover in the doldrums well past April. However, with a shift in plans to travel abroad following the September 11 terrorist attacks on the United States, these numbers also began to achieve a modest recovery, climbing slightly upwards by the end of fiscal 2001.
   Thus, while overall economic conditions remained severe for the region throughout the term, a few promising signs of recovery were also evident by the end of fiscal 2001.

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