Despite constant worries about deflation, Japan's economy continues to recover. From Bloomberg on Tuesday:
Japan’s broadest indicator of economic health rose for an 11th month, extending the longest streak since 1997, as the nation sustained an economic recovery amid deflation.
The coincident index, a composite of 11 indicators including factory production and retail sales, climbed to 100.7 in February from 100.3 a month earlier, the Cabinet Office said in Tokyo today. The median estimate of 18 economists surveyed by Bloomberg News was for 100.5...
The leading index, a composite of 12 indicators including stock prices and consumer confidence, rose to 97.9 in February, the report showed...
Don't expect an increase in interest rates soon from the BoJ though. From AFP/CNA today:
Japan's central bank kept its key lending rate unchanged at 0.1 per cent Wednesday and signalled that a recovery in the world's number two economy is on track despite the "critical challenge" of deflation.
But while strengthening overseas markets and stimulus measures have buoyed the economy, weak domestic demand poses a key hurdle, the bank said.
There is "not yet sufficient momentum to support a self-sustaining recovery in domestic private demand," it said in a statement at the end of a two-day meeting.