Now that Japan has unveiled bold steps to end years of deflation, the world's third largest economy can at last stop being a laggard and start making a positive contribution to global growth, analysts tell CNBC.
The Bank of Japan (BOJ) on Tuesday doubled its inflation target to 2 percent and made an open-ended pledge to pump trillions of yen into the economy by buying government bonds and other assets from next year after its current asset-buying program ends.
There was some disappointment in markets that the BOJ did not go far enough. Still, hopes are growing that the measures will break Japan out of a cycle of falling prices and anemic growth – something that can only be good news for a world economy trying to get back on track in wake of the global financial crisis.
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"You have this country, Japan, that contributes 10 percent to the world's GDP (gross domestic product) but has been in recession every 2-3 years with its average economic growth constrained," said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney.
"So now with the reflation policies, we're moving into a world where Japan avoids a recession every couple of years and average growth is going to be 1.5 percent or so and you get a boost to global growth that just wasn't there before," he added.
Japan's economy has contracted for two quarters running, pushed into a recession by weak global demand for its exports. It has been in a technical recession five times in the past 15 years. And for much of the past 20 years, prices have fallen, discouraging spending and contributing to a moribund economy.
A new government, led by Prime Minister Shinzo Abe, came to power in elections in December and has pledged to revive the economy, piling pressure on the central bank to pursue an aggressive monetary policy. It also unveiled a $117 billion stimulus package earlier this month to give the economy a short-term boost.
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The International Monetary Fund on Wednesday raised its 2013 GDP forecast for Japan by about 0.5 percent to 1.2 percent because of the fiscal measures.
"Japan is contributing again to global growth. After falling into recession we see brighter prospects this year for Japan," Jorg Decressin, deputy director, research department at the IMF told CNBC Asia's "Squawk Box" on Thursday.
AMP's Oliver said the BOJ's policy steps and the impact they have on the global economy also need to be seen in the context of brighter growth prospects as the U.S. and Chinese economies rebound and worries about a debt crisis in the euro zone ebb.
"The importance is that it (the BOJ announcement) comes at a time when things are looking a bit healthier, the U.S. housing recovery is getting underway, risks surrounding Europe are receding, China's economy is looking a bit better," he said.