Japan

The complacent optimism of capitalist consensus is fast disappearing. At the beginning of this year, the general view about the world economy was that US growth would slow gradually to about 3% from 5%, Japan would pick up a little to about 2% and Europe would trundle along at about 2.5%. The US central bank, the Federal Reserve, would cut interest rates to ensure that any slowdown would not mean a loss of investor confidence or consumer demand. Well, January seems like eons ago in global economics. After a non-stop spate of warnings about lower profits from the main US corporations and the release of economic data each day that showed a weakening economy, US...

"Flat on its back for years and showing few signs of life, Japan's economy was nonetheless still in the world of the living. When we last checked, that is. Reports of its imminent demise are now coming thick and fast. A world that had grown bored with the 'Japan isn't growing' story is suddenly paying attention to the new 'Japan will collapse and take the rest of us with it' story." The Economist, 11/4/98. Phil Mitchinson analyses the reasons behind.