Japan is poised for dramatic economic growth. In 2015, Prime Minister Shinzo Abe pledged to boost its GDP to 600 trillion yen ($5.4 trillion) by the time Tokyo hosted the Olympics in 2020. As this would require consistent annual growth rates of 3%, there are some who might deem it unrealistic. But the country’s economic turnaround means 600 trillion is within reach; and with this new shot of confidence, it’s a goal at least worth aiming for. Japan has just clocked its longest growth streak – seven consecutive quarters – since 1994. The rate for the last quarter was 2.1%.
The interventionist stance of “Abenomics” – boosting the Japanese economy with government-spending packages (the $17.8 billion plan announced before last October’s election along with expansionary monetary policy to stimulate inflation) – is aligned with the worldwide sea change against hard austerity policies over the past couple of years. This quantitative easing-like policy – effectively doubling the money supply in Japan – has been praised for being on a scale that aims to get it into people’s hands, rather than just the banks.
Outward-looking spirit
Challenges remain: pay growth remains stubbornly low – despite low unemployment at 2.8%, which is a two-decade best – but the broader economic signs are encouraging. The Nikkei 225 stock index hit a 25-year high in October last year, fuelled by strong foreign investment and a weaker yen driving exports. This renewed confidence is being felt abroad too, with other countries, such as India and Indonesia, looking to Japan’s progress on infrastructure growth. Monocle magazine praised this new, outward-looking spirit when placing Japan fourth in its recent Soft Power Survey.
Unsurprisingly, it is technology that is leading Japan toward its economic revival. Consumer electronics and high-value add industry, such as automobiles, traditionally played a major role in Japan’s rise to economic prominence in the 1970s and 80s. Now it appears this deep technology pedigree will push Japan to the forefront of the Fourth Industrial Revolution (4IR). The top 10 biggest gainers on the Nikkei 225 last year were dominated by tech companies, with Yaskawa Electric, a Kitakyushu-based firm specializing in industrial robots, placing first.
Of course, this means Japan may also be the first to grapple with the threat to the human workforce posed by automation in the 4IR. But that would be just the latest in a series of post-industrial dilemmas Japan has had to overcome. The country’s rapidly ageing population – it broke its own record for the number of centenarian citizens for the 47th straight year in 2017 – was a foretaste of what western societies are increasingly experiencing.
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As such, Japan is the canary in the world’s post-industrial coal mine.
While changing demographics is not a problem unique to Japan, it’s still first among countries to channel its stock towards innovative solutions, such as automated driving, tracking systems to locate people with dementia and “caregiver” robots to support staff for the elderly.
Since 2012, Abe has talked about empowering Japanese women as part of a broader wave of economic reform in the country, and steadily the fruits are coming to bear. The rate of workforce participation for prime-age women (aged between 25 and 54) soared to 76.3% in 2016 – that’s higher than in the United States and other OECD countries.
But workforce participation is only part of the story: in Japan the disparity between men and women’s wages remains significant. The country was placed 114th in the World Economic Forum’s Global Gender Gap Report for 2017, down from 111th the year before. So while there has been movement towards gender equality over the past 30 years, it has not been enough. If Japan is serious about driving innovation and achieving economic growth, it has a lot more to do in order to truly embrace diversity and inclusion.
Similar to Japan, every society will have to decide which path it wants to tread toward economic progress. But – whether it’s for its technological genius or the fate of the flesh-and-blood humans dependent on it – the country is an outrider for the world’s economic and societal future. Long after the 2020 Olympics are over, the world’s eyes will still be on Japan.
This article originally appeared on Asahi Shimbun.
