Political clout to restore confidence in Japan's economy and stimulate spending is seen as indispensable to round out actions already taken by the government with its 2012 supplementary budget and a goal of 2% inflation. One likely holdup, however, is the broad perception that a deflationary environment will persist. Meanwhile, the World Bank has nearly halved its growth outlook for Japan's economy to 0.8% this year, largely due to reduced exports to China.

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