True, the economy is unlikely to boom. Independent economists think the government's official forecast of 2.5% real GDP growth for financial year 1996/7 is pie in the sky. Most economists would be surprised if growth much exceeded 1%. The real estate market still looks dodgy too. Analysts believe land prices still have a further 20% or 30% to fall - which will delay the recovery of the banking sector.
But Japan's financial markets will at last start to modernize. A senior official at a Japanese securities house comments: "1996 will be a benchmark year for deregulation in the capital markets in Japan."
The consequences of that deregulation will be that opportunities for foreign borrowers to issue bonds and equities in Japan will further increase and big Japanese institutions will start to buy foreign securities in large sums again. Even the stock market could be on the rise. Some analysts believe the Nikkei index, which was testing 20,000 in December (having risen from below 15,000 in July), could continue to climb as Japanese retail and foreign institutional investors increase their exposure.
What deregulation is likely? The restrictions on which foreign borrowers can issue public bonds in Japan were significantly eased from January 1.