Political and economic conditions at the end of November seem to be in a lull or stalemate both in Japan and abroad. But this is only a passing phenomenon. It may be the case that signs of turmoil and instability are only temporarily receding below the surface as the yearend and New Year approach.

Nations around the world, including Japan, have suffered greatly from what has transpired since the Sept. 11 terrorist attacks on New York and Washington. International relations have undergone a great change in the past three and a half months, and many nations, including the United States and Japan, have been dealt a heavy economic blow.

Washington recently officially announced that the U.S. economy began to slump about six months before the terrorist attacks. It predicted that the downturn would continue at least for one year, possibly ending next spring. With the Japanese economy already reeling, the major economies of Western Europe and Asia have entered simultaneous recessions.

It is certain that the attacks on the U.S. and the subsequent retaliatory war in Afghanistan triggered the worldwide recession, and that the global economy has continued to deteriorate over the past three and a half months. There persists an argument that the war should have touched off an economic recovery, leading to further expansion. But this seems to be an outdated view of the spinoff effect of war on economies.

The government of Prime Minister Junichiro Koizumi on Tuesday finished drafting a midterm economic and fiscal outlook. It predicts that for about two years, or until the end of 2003, the growth rate of the Japanese economy is likely to level off around zero percent. From fiscal 2004, the government wishes to realize real-term growth of about 1.5 percent, or 2.5 percent nominal growth, on the strength of expansion of private-sector demand.

This is a moderate forecast. Just seven months have passed since Koizumi inaugurated his Cabinet at the end of April. While the economy was already showing signs of deflation at the beginning of this period, the Koizumi government has been racing toward the goal of "economic structural reforms." His government has been riding on the strength of high public popularity and support, but forces dedicated to the protection of vested interests -- mainly the "resisting conservative members" within the governing Liberal Democratic Party and the bureaucracy -- have been trying, openly and behind the scenes, to foil or oppose such reforms.

Recently finding themselves on unfavorable ground, however, Koizumi's opponents have changed their tactics and are now calling on him to compromise with a double-pronged policy of attaining both moderate structural reforms and economic recovery.

For the Koizumi government, the crucial moment will come when it finishes preparing the government budget for fiscal 2002 toward the end of the year and the Diet deliberates the new budget in the ordinary session to be convened in January.