The Economist on Japan

"Junichiro Koizumi, the prime minister and head of Japan's Liberal Democratic Party (LDP), will have a hard time implementing any major policy changes before he leaves office in September. The focus will shift to Mr Koizumi’s potential successors and whether they can repair deteriorating relations with South Korea and China. The next prime minister may also face pressure to pull Japan’s self-defence forces out of their helping role in Iraq. Japan’s economic recovery should continue, though investors may be shaken if the Bank of Japan abandons its ultra-loose monetary policy too abruptly. A group of forecasters polled by The Economist predict that GDP will rise by 3% in 2006 and 2.4% in 2007, with prices rising by 0.4% in 2006 and 0.6% in 2007."

Source: The Economist