Confidence rises but recovery fragile

Perhaps more so than ever, the Japanese economy is presenting quite a challenge to those wishing to discern a clear picture. To outline our current view, a little background is required. Following the collapse of the bubble economy in the late 1980s, confidence was systematically eroded as the government turned a blind eye to growing banking sector indebtedness, culminating in the crisis of 1998 and recession. Throughout the decade, attempts to tackle the symptom rather than the cause of the malaise by injecting huge amounts of capital into the economy floundered due to poorly targeted a...