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Is Japan’s sun still rising?

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When I participated in the Chatham House/Daiwa Research Institute conference on the post-Brexit Japan-United Kingdom relationship in Tokyo last month, it was my first visit back to Japan since my departure from Goldman Sachs almost six years ago. Prior to this trip, I had been visiting the country regularly since 1988, so it was helpful to see things from a slightly more detached perspective.

By and large, Japan in 2019 feels relatively stable when compared to other advanced economies. A decade from now, I would not be surprised if it continues to show the highest real (inflation-adjusted) per capita gross domestic product growth rate in the Group of Seven.

True, Japan’s annual GDP growth has averaged just 1.1 percent so far this decade; but its declining population and shrinking workforce is already translating into stronger per capita performance. In fact, given the country’s demographic challenges, it might well be outperforming its long-term growth potential.

Moreover, the Japanese government has begun to publicize its efforts to attract certain foreign-born workers, having finally recognized that immigration will be necessary for future growth. That has been obvious for at least 20 years now. Yet, in hindsight, Japan’s long refusal to adopt a pro-immigration strategy no longer seems as mistaken as it once did, given the recent backlash against globalization........

© The Japan Times