JAPAN’S ECONOMY

JAPAN IN DEEP HIBERNATION. WHAT ARE WE TO DO

Tan Sri Lin See-Yan

The Malaysia Star, September 25, 2010

I am privileged to be associated with the Asian Economic Panel (AEP), first convened in 2002 on the initiative of the Centre for International Development at Harvard University, Keio University and the Korea Institute for International Economic Policy.

This forum promotes quality analysis of key economic issues in Asia, and offers creative solutions by drawing on the collective wisdom of worldwide economists. The prime movers were Prof Jeffrey Sachs and Prof Eisuke Sakakibara. When Jeffrey moved to Columbia, his new Earth Institute replaced Harvard. Brookings has since come on board.

AEP last met at Keio University (Tokyo) on Sept 11. Observations on what’s happening in Japan by Prof Yoshino, a respected insider with deep knowledge of official thinking, were insightful. He is optimistic Japanese economic activity will gradually improve, shake off deflation and return to steady nominal growth since the bubble burst in 1990. Sure, the economy is stuck with deflation; public debt is rising, population is ageing and Japan still has to define and find its “proper place” in the world.

But Japan is unique. Contrary to conventional wisdom, it is simplistic to say all Japan needed is a strong leader with guts to do what everyone knows has to be done. Yes, Japan’s leaders have so far oscillated and shirked hard choices.

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