By Michael Pettis* | IDN-InDepth NewsAnalysis
BEIJING (IDN | Yale Global) – Imagine having predicted in 1990 that the Japanese economy, then widely expected to overtake the US within a decade or two, would grow on average by less than 1 percent a year for the next 20 years. In the unlikely case that anyone believed you, he would probably have drawn two worrisome conclusions.
First, Japan at that time was considered the world’s growth engine, and so a collapse in Japanese growth would likely throw the world into a tailspin. Second, if after several decades of robust expansion Japanese growth were suddenly to drop so dramatically, there was sure to be social and political upheaval in Japan.