What Lever Could Get Japan Rolling?

Several growth strategies are being debated, but even if some radical plans were enacted, a decade of deflation could be looming

Japan's economy is falling further into a deflationary spiral. On Jan. 24, the government predicted that the economy would expand by 0.6% in real terms and contract by -0.2% in nominal terms in 2003. The same day, interest rates fell below zero for the first time in Japanes history. The overnight call rate on $123 million of funds traded between three foreign banks was -0.01%. Says Takatoshi Ito, professor at the Research Center for Advanced Science & Technology at the University of Tokyo: "Things are getting worse by the day."

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