This picture taken on May 13, 2016 shows Japanese Prime Minister Shinzo Abe attending a budget committee session of the House of Councillors in Tokyo.KAZUHIRO NOGI/AFP / Getty Images
When Japanese Prime Minister Shinzo Abe swept into power in late 2012 with a bold strategy to revive the sputtering economy, growth was flat, inflation was non-existent, the yen was too strong and the Bank of Japan was reluctant to pursue more aggressive monetary measures.
After more than three years of Abenomics and its emphasis on massive monetary and fiscal stimulus, that revival seems as elusive as ever.
An overvalued yen is again taking a heavy toll on corporate profits. The economy is flirting with recession, consumer price inflation is falling again and the Bank of Japan seems to be running out of magic tricks after shocking markets by introducing negative rates earlier this year.
Meanwhile, policy makers have little stomach for another wave of fiscal pump-priming as public debt skyrockets.
We'll get a clearer picture of the continuing struggles faced by the world's third-largest economy this week when preliminary GDP data for the first quarter, as well as the latest monthly figures for industrial production, machine orders and capacity utilization, are released.
It won't be pretty.
Recent data "suggest that Japan's economy stagnated again in the first quarter or perhaps even contracted a little," said Mark Williams, chief Asia economist with Capital Economics.
"In particular, falling capital goods shipments would seem to point to a drop in non-residential investment. Things are looking slightly better for the second quarter, but not much."
Consumer spending, which has been weak since a controversial sales tax hike in April, 2014, may pick up slightly.
But thinner profit margins have dampened what little enthusiasm there was for the wage gains needed to boost confidence and get people spending again.
Against that backdrop, Mr. Abe has overruled deficit hawks in his party and opted to postpone another increase in the consumption tax scheduled for next spring.
"Although we are inclined to attribute the weakness of consumer spending to the milder-than-usual winter weather, the weakness is broad-based, even beyond weather-sensitive apparel sales," JPMorgan analysts said in a research note.
They cut their GDP forecast for the first quarter to zero.
Hajime Takata, chief economist at the Mizuho Research Institute in Tokyo, pegs growth a tick higher at 0.1 per cent, in line with the consensus forecast.
"From the beginning of this year, the U.S. changed the exchange regime from a higher-dollar to a lower-dollar policy," Mr. Takata said in an e-mail comment. "This means headwinds for Abenomics and the BoJ."
With pressure mounting on the central bank to halt the ruinous rise of the yen, Governor Haruhiko Kuroda has borrowed a page from European Central Bank President Mario Draghi, who calmed markets in 2012 with his famous vow to do "whatever it takes" to safeguard the euro.
Mr. Kuroda insists that the bank still has plenty of ammunition to do more monetary easing and drive inflation toward the bank's 2-per-cent target.
"We will carefully consider how to make the best use of the [current] policy scheme to achieve 2-per-cent inflation, and will act decisively as we move on," he said in a speech Friday. "There is no doubt that the BoJ has ample space for additional easing."
That could mean even wider asset purchases or a deeper dive into the uncharted waters of negative interest rates. The central bank is likely to add a wage or nominal GDP target to its conventional inflation goal, Mr. Takata predicted.
That won't lift the spirits of downcast industrialists who expect this will be a particularly trying year.
Mighty Toyota Motor Corp., which has set profit records for three consecutive years thanks in part to a weaker currency, forecasts a 35-per-cent drop in net earnings this year – the first decline in five years.
The company cited such industry-specific problems as slower demand in the United States and other key export markets, higher expenses, including costs stemming from the worldwide air-bag recalls, and production cuts caused by earthquakes in southern Japan. But the gloomier outlook also underscores how vulnerable Japanese exporters are to a rebounding yen.
The currency jumped to its highest level in more than 18 months after the central bank refrained from boosting monetary stimulus last month.
It's unlikely that policy makers can continue to sit on their hands as the economy sinks. Talking a good game won't be enough.