Miraculously, during the back end of 2016, the Japanese economy, which has struggled to get out of a deflationary quagmire for the past several decades, saw consumer price growth.
Since, October 2016, it has seen seven consecutive months of inflation, recording a 0.4% year-on-year rise in April.
Growth in the region has also been encouraging, and in line with other developed markets, which, albeit have been growing at a slower pace.
For some, the case for Japan’s recovery is so strong that one Bloomberg reporter proclaimed the country had overcome its “bout of sclerosis,” adding that the US could learn a thing or two from prime minister Abe’s approach to targeting real, structural problems.
At the same time, wage growth in the region remains stunted. Total cash earnings took a tumble in March rather unexpectedly, falling to 0.4% year-on-year after being up 0.4% the month prior.
This is one of the reasons Tilney Bestinvest’s director of investment strategy Ben Seager-Scott remains “pretty sceptical” on the state of affairs in Japan.
“There seems little evidence to me that the stimulus measures have led to a sustained improvement in economic fundamentals,” he said.
“Real wages are negative again, effectively meaning falling living standards.
“Extraordinary monetary policy seems to be failing even faster than we’re seeing elsewhere, and economic growth remains lacklustre, which contrasts with signs of sustained growth elsewhere in the world, particularly in Europe.”
Nevertheless, Seager-Scott is reluctantly neutral on Japan, in light of the improving global trade picture, “even if the domestic situation is uninspiring.”