Japan is currently known as the world’s third-largest economy and the most industrialized nation. However, being a superpower and all that, the problems that a larger nation faces are also in a wider scale. The Land of the Rising Sun has a public debt larger than the Euro Zone, which has been struggling to extinguish its 2-year long debt crisis. Add up to the picture the persistence of deflation and the climb of the Japanese yen. From those points alone, one can easily say that Japan is screwed. Despite that, rebuilding efforts have kept the nation standing on its two feet until now. On the contrary, experts forecast Japan’s growth to lose steam for the remainder of this year.

Japan’s economic growth probably peaked in the first quarter and analysts forecast the pace of expansion will halve by year-end as the boost from earthquake reconstruction fades. Gross Domestic Product rose an annualized 3.5 percent, compared with a 0.7-percent contraction in the final three months of 2011, according to the median estimate of 27 economists surveyed by Bloomberg News. On the other hand, Japan’s growth will probably slow to a 2.2-percent pace in the second and third quarters, and 1.7 percent in the final three months of the year, according to the average forecast of 40 economists in a survey by Japan Center for Economic Research released last Tuesday.

Meanwhile, as aforementioned currency and deflation woes continue, the Bank of Japan is likely to be pressed again to add its stimulus more in order to support growth. With the boost from rebuilding starting to wane, the nation will increasingly depend on exports just as Europe’s sovereign-debt crisis and a slowdown in China cloud the outlook for global demand. “The pace of a slowdown later this year will depend on how the European debt crisis will affect the Yen and exports,” said Masaaki Kanno, Chief Economist at JPMorgan Securities Japan Co. in Tokyo and a former BOJ official. “The Bank of Japan may have little choice but to ease more -- once every three months.” In a nutshell, Japan is practicable to decelerate for the rest of 2012, and the Euro Zone debt drama is foreseen to add stopping power to the slowdown.