Red Sun Rising

After a decade in decline, Japan is on the road to repair.

Issue: Winter 2004-2005

In 2002 I stood almost alone among international observers ofthe Japanese economy in predicting that Japan's future was stillbright--and that three percent economic growth was quite attainableover the next few years. Some, especially the prophets of a rapidJapanese meltdown, Argentina-style, mocked this prediction. Otherswere simply skeptical. But suffice it to say, the Japanese economyhas now shown eight straight quarters of economic growth. Annualreal growth in the third quarter of 2003 was at 3.3 percent--and anastonishing 7.5 percent in the last quarter--beyond my guardedlyoptimistic estimate. While Japan faces real problems--which havebeen discussed in these pages in past issues--they are far frompermanent. And economic data have clearly shown that the pessimistsare wrong. Japan is moving in the right direction, and growth islikely to be sustained for the next few years, barring aninternational convulsion.

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