Both prices and wages have been falling for nearly a year and are projected to continue earthward through 2000. Fiscal policies are inadequate to prevent output from sliding for three straight years, a first for a G7 country. Like interest rates, domestic confidence is near zero. Key SECtors Weak sales of cars, steel, ships, heavy machinery and some electronics weighs on manufacturing.
Erosion continues in the banking system despite recapitalization efforts.
Inflation is at a 35-year low. Surprisingly strong consumer spending could provide a bulwark against further global commodity price deflation. Unemployment is at a 28-year low. Key Sectors Lower interest rates could result in excess inventory and contribute to manufacturing overcapacity. Falling corporate profits portend a sharp slowdown in capital spending by businesses.