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Deflation counters Japan's optimism


Deflation counters Japan's optimism


The Japanese government has allowed itself a hint more optimism about the future prospects of its economy for the first time in eight months – saying in the monthly report that it is picking up ‘steadily’, boosting profits, house building and consumer spending.

But economists are far from saying that Japan is out of the woods yet, stressing that deflation is still a long way from being beaten.

At the First Asia Business Summit in Tokyo, business leaders from all around the region heard that despite today’s problems, Asia will challenge the dominance of Europe and America in the first half of this century.

The Japanese foreign minister Katsuya Okada said: “The Asia Development Bank estimates the region will need 5.8 trillion euros in investment over the next 10 years, a sum which cannot be provided by official development aid alone. It needs co-operation between the public and private sectors.”

The Bank of Japan sees deflation lasting for a few more years, which is not good news for the economy. Under deflation, prices fall, and that means consumers tend to wait for a better deal before spending their money so stifling recovery.

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