The Nikkei 225 has reached an all-time high, and profitability indicators such as the ratio of ordinary profits to sales have already exceeded those of the bubble economy. While corporate performance appears to be good, the Japanese economy has a long-standing problem that needs to be solved: excess savings by companies.

This is justifiably believed to be the result of suppressing domestic investment and prioritizing loan repayment and internal reserves. For a quarter of a century since the bursting of the bubble in 1990s, Japan's non-financial corporate sector has been excessively saving rather than investing.

One ongoing factor contributing to the excess saving is low growth expectations of domestic markets. According to a survey by the Cabinet Office, Japan's expected growth rate, which was in the mid-3% range during the bubble economy, is now sluggish at around 1%. In addition, as UNCTAD (United Nations Conference on Trade and Development) statistic shows that Japan's inward stock of direct investment as a percentage of GDP is 196th out of 198 countries in the world (2022). This figure indicates a lack of preference for investing in countries with such low growth expectations.

Once again, the Japanese government is strongly urged to steadily implement various growth strategies and raise growth expectations based on concrete results. At the same time, we, the private sector, need to change our mindset regarding investments which has been affected by this deflationary environment.

Currently, we are facing various challenges, including environmental issues such as global warming, and population decline, food security, as well as energy issues. Overcoming these challenges is an unavoidable path to realizing a sustainable society. Simultaneously, solving these social challenges offers the Japanese economy a chance to revive and grow.

Solving these social challenges is an opportunity, and we need to create new industries that will shape the future, by way of investing in businesses that are both socially and economically feasible. To this end, it is more important than ever to review and transform existing business structure.

We will continue to take on challenges without being bound by past successes or fearing friction or risk. I believe that continuously taking up challenges with "animal spirits" is essential for the revival of the Japanese economy driven by strong investment, and for the realization of "sustainable capitalism".