Annotation The OECDs survey of the Japanese economy considers a range of issues including: macroeconomic developments and key economic challenges; measures designed to end deflation and achieve fiscal sustainability; product market competition and economic performance; and structural reform policies to enhance growth rates. Findings include that the recent acceleration of growth has raised hopes that Japans economic fundamentals are changing for the better following a disappointing decade, during which economic growth averaged only one per cent a year. However, the continuance of fundamental reforms are required to lay the foundation for a robust and sustainable expansion needed to reverse the downward trend in Japanese living standards relative to other OECD countries.