Even where growth in the past was outstanding, the current prospects are not always good. Japan faces the same sclerotic problems that confront some other advanced economies. Unless Japan grows, global prosperity and free trade will suffer. The situation in Japan has all the overtones of the US in 1929. The implication is that deflation is a bigger threat for Japan and the world economy than inflation.
Deflation reduces the value of inventories and encourages the postponement of purchases.
Although such trends were a common occurrence in the last century, inflation has been the threat since the Great Depression of the 1930s. Dornbusch's comment may be an exaggeration, but Japan is no longer the country we used to know. Remember, a few years ago economic doom predictions about the United States were common, but turned out to be totally wrong. Economic history has no record of countries or regions that experience uninterrupted growth. Life is not linear.