This should be expected because of the similarities of the problems faced. Civil wars and instability have ravaged both regions. A survey of entrepreneurs in 69 countries has shown strong correlation between perceived credibility of government policies and growth in investment and gross domestic product. Where the credibility index was low, the rates of GDP growth were negative 4 . 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.