Is Japan heading for a slump?

Japan may soon slip into recession but it will be a shallower trough than those of the past decade, with Japanese companies and banks in much better shape to weather crumbling consumption and export markets.

Having cleaned up their balance sheets after the collapse of an asset bubble in the 1990s, Japanese banks have largely avoided the havoc wreaked on US and European lenders by the global credit crunch. Factories, having cut costs, look more resilient.

So this recession will likely be an imported phenomenon, with consumers and companies hammered by surging energy and commodity costs and exports markets in the United States and Europe shrinking under the weight of the credit squeeze.