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Japan has been fighting the 3D war (debt, deflation and demographics) for 20 years, with no meaningful economic growth to speak of. Real gross domestic product growth rates during this period have averaged a paltry 0.9 per cent. These years of anaemic growth have come right after Japan's golden growth period (1965-1990), during which it boot-strapped its way to the top of the economic ladder in just 25 years.
The million dollar question is: can Japan do it again?
The bursting of the property and stock market bubble in the 1990s was devastating and necessitated the Japanese government stepping in, to expand its balance sheet significantly, thereby allowing the troubled corporate sector to deleverage itself.
The good news is that, today, the non-financial corporate sector's net surplus has reached 6 per cent of GDP. Corporate investment, which peaked in the 1990s, has steadily declined - thereby eliminating overinvestment that plagued Japan for more than a decade.
The Japanese consumer responded to the debt and deflation problem by cutting spending. This exacerbated Japan's economic troubles.
The recent three-pronged approach by the Shinzo Abe-led government, with its emphasis on a "do what it takes" approach to ending deflation, has targeted two important variables to get the job done: real interest rates and the value of the yen.