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　　Japanese Economy Remains Weak

　　Japan is struggling with its economy as the countryhosts the yearly meeting of the G-7 industrializednations.

　　Japan has the world's third-largest economy, behindthe U.S. and China. Many countries copied Japanwhen it had a strong and growing economy.

　　Japan has been dealing with deflation for many years. Deflation is "a decrease in the amount ofavailable money or credit in an economy that causes prices to go down." Deflation can oftencause a recession.

　　The population in Japan is growing older and the country is not diverse. Most people in thecountry are ethnic Japanese. Last year, people in Japan criticized Miss Japan, Ariana Miyamoto,for not being "Japanese enough." She has a Japanese mother and a black American father.

　　Many Japanese also do not support mass immigration, which other countries have used tomake up for, or balance, the effects of a declining and aging population.

　　Savings vs. spending

　　Takuji Okubo is the managing director of Japan Macro Advisors. He says Japanese PrimeMinister Shinzo Abe does not understand problems in the labor market or with pensions. Hesays the prime minister "has been just unable to tackle any reforms."

　　Many of Japan's public pension plans do not have enough money to make payments. This hascaused many families to believe the plans will fail, so they save a lot of money.

　　The average Japanese family has about $164,000 in savings. That is much higher than that offamilies in other developed countries.

　　Young Japanese working in their first jobs do not earn a lot of money, so they do not havemuch to spend. And people who are retired and have savings are worried about their monthlypayments, so they are not spending money either.

　　Manabu Goto operates a small, 50-year-old food store in Tokyo.

　　Goto has opened the store on weekends and added more products. He wants to attract morecustomers and convince them to spend more money.

　　However, he says the policies of the prime minister have "failed to get citizens to spendbecause people are uncertain about the future. So the government needs to try somethingelse."

　　Structural changes are needed

　　Martin Schulz is a senior economist at the Fujitsu Research Institute. He says the Japanese"market is shrinking overall. It makes it very difficult to get it moving again. This requires somemajor structural changes and these take time."

　　Among the needed changes, he says, are: to open the economy, to change the structure of thefarming industry and to help Japanese companies invest in Southeast Asia. He says thesechanges will help the Japanese economy improve over a 10 to 15-year period.

　　William Saito is an advisor for the Japanese Cabinet. He says "it's just confidence. If you lookat the last 20 years -- the economic fundamentals, the infrastructure, government politics --these things haven't actually changed."

　　Shin Fukushige is a managing director for the technology company Seikoware. He says, "therehas been a huge improvement in psychology" in the past ten years. But it is difficult for manyJapanese who begin new businesses to convince workers to join their companies."

　　Many of Japan's large companies were created many years ago. But many large and successfulcompanies in the United States were created in the past 20 or 30 years, including Apple andGoogle. This has helped the American economy grow.

　　Experts are asking how to help Japan's old and slow-moving economy grow. Some of thembelieve actions have already been taken that will show results in the years ahead.

　　What to watch for

　　After the G-7 meeting this week, many people will closely watch the actions of the Bank ofJapan. The bank's leaders want people to wait a few more months for recent governmentmeasures to take effect. If these measures are not successful, the bank could take strongaction. Some experts hope the bank will place fees on savings and force companies to sharplyincrease wages.

　　However, the other G-7 nations do not want Japan's government to lower the value of itscurrency -- the yen. That would make the country's exported products less costly and couldhurt the economies of other countries.

　　I'm Mario Ritter.