Earlier this month, the government said the economy will contract 0.9 percent in the fiscal year ending in March. No one has taken the initial target of 1.7 percent growth seriously for months.
The Bank of Japan, which has already lowered interest rates to zero, warns the economy probably won't start growing until 2003.
"Every economic measure you can look at has been going in the wrong direction," said Mark Fields, president of automaker Mazda Motor Corp.
Japan is having a hard time switching gears from a successful model of government-orchestrated modernization that guided policy during the last half-century. As a maturely industrialized nation, it now needs a new vision.
No longer able to compete in costs with modernizing Asian nations such as China, NEC Corp, Matsushita Electric Industrial Co, Hitachi and other electronics giants are sinking into losses.
Japan's education system and corporate culture are still caught in an outdated mindset based on simple mass production
There are no simple solutions, the Nihon Keizai business daily said. "There is no cure-all."
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