Persistent deflation and massive bad loans in the nation's banking system have weakened Japan's economy and no improvement will be seen until structural reforms are implemented, according to an annual government white paper released Tuesday.
"The susceptibility of Japanese business to the ups and downs of the global economy is evidence of the weakness of the Japanese economy," the fiscal 2002 Annual Report on the Japanese Economy and Public Finance says. "It is essential to rid the economy of its fragile nature and carry out structural reform to build an economic structure that contains high growth potential."
The tax system for individuals and companies also needs to be reformed in a way that will bring about economic vitality, the report says.