The economic recovery in Japan, which had been fueled in part by the expansion of public expenditure, proved uncertain. The positive performance of private investment, which expanded by 4.5 per cent in the first nine months of 2000 after contracting in 1999, contrasted with stagnant consumption.
In the third quarter net foreign demand's contribution to growth turned negative as a consequence of the sharp slowdown in exports; sales of capital goods to emerging markets in the region contracted. There continue to be deflationary pressures on both consumer and producer prices.