The Japan economy has been expanding since Abenomics started in 2012 (a series of support measures ushered in to stimulate growth), mainly driven by ultra-easy monetary policy. After decades of weak growth and deflation, the economy picked up and jobs were created – giving the Japanese youth something to look forward to for years to come. However, since the trade tensions began between the US and China – Japan is a big trading partner of both of these countries – the growth prospects faded. Of course Japan has a robust internal growth machine with strong consumer interest and more recently, industrial investment that drives several core industries, but again, some expected weakness in the future. Japan saw an annualized growth of 2.2 percent in Q1 of 2019, better than the 2.1 percent expected. This is rather strong relative to recent historical and to current expectations. Our ideas below.
Our View: Japan is realigning itself with the world, and showing leaderships capabilities – economic and political
Japan is moving from a platform that has kept under the US security umbrella but now it is moving out on its own. Japan will work with the US as a partner in Asia on geopolitical, military and economic levels. The strong relationship between the US and Japan has just gotten stronger as it is clear that Japan will work with the US on many levels. From a economic standpoint, Japan and the US will continue to work on trade that is mutual beneficial. Currently, Japan is working with China, South Korea, the European Union and the US to re-establish its position as a major player on the world stage and a partner with these countries to ensure mutually beneficial trade in the coming decade. With an aging population, Japan is relying more on robotics and other ways to fill gaps for manufacturing and a new society that is more service driven. Japan has also worked to foster new technologies for the future.