The editors of three leading British journals (The Times, The Financial Times and The Economist) have recently visited Japan and reported positively on Japan's economic prospects. They noted that Japan had largely recovered from "the lost decade." The Economist was bullish, heading its recent supplement on Japan, "The Sun also rises."
Increased labor flexibility, rising employment and wages, as well as growth in GDP and in consumption, have all been taken as positive signs for the future. The increasing importance of shareholder value and the number of mergers and acquisitions have also been interpreted as signs of the health of Japanese capitalism. Prime Minister Junichiro Koizumi is thought to have made significant progress in moving the economy away from dependence on state-sponsored projects and to have pressed ahead with essential reforms of the Japanese bureaucracy. The Japanese have been depicted as more confident and hopeful for the future.
All these signs of renewed strength in the world's second-largest economy are good news for Japan and the rest of the developed world. But it would be a mistake to overlook the real problems that still lie ahead for Japan's economy and politics.