Miyako Suda, one of the more hawkish members of the Bank of Japan’s policy board, recently warned that the central bank must not delay too long before raising interest rates from their current 0.5 per cent. If it did, she fretted, the chances that the economy might overheat would build. That she made such remarks when consumer prices were in their seventh month of decline – albeit a wafer thin 0.1 per cent – and when economists were scaling back growth forecasts to below 2 per cent, shows just how modest expectations are for Japan’s economy.

Output actually shrank by an annualised 1.2 per cent in the second quarter, though signs are that growth has already resumed, propelled by still-robust exports. Indeed, by some – rather misleading – measures, Japan’s economy, which has been growing since the first quarter of 2002, is in its longest period of sustained recovery since the war.