But after that, estimates Mr Yamakawa, Japan's potential growth rate could increase to 2-3% within a decade.

ECONOMIST: Japan��s economy

If structural reforms are not implemented, the latest recession may be mild, but, according to Tetsufumi Yamakawa, an economist at Goldman Sachs, long-term potential growth may decline to only 0.6% a year by 2009, as productivity growth stalls and the labour force shrinks.

ECONOMIST: Japan��s economy