Deflation key to direction of the Japanese economy

Deflation will be the defining feature of the Japanese economy in 2002, according to Tetsufumi Yamakawa, director of Japan Economic Research at Goldman Sachs. He predicts growth of -1.1% in GDP for 2002 after a 0.4% drop in 2001. Fraser Chalmers, head of Japanese equities at Standard Life Investments, also sees deflation and how it is handled as key to how Japan will perform over the medium term. He says the government must get people spending and to do that there needs to be a perception that savings deposits are likely to earn a negative real return. The Bank of Japan's suggesti...