The keynote address, delivered by Tomoko Hayashi, Chief Economist and Director General of the Economic Research Bureau in the Cabinet Office of Japan, provided a comprehensive overview of Japan’s current economic situation, recent developments, and future challenges. Hayashi-san highlighted significant shifts in Japan’s economic landscape, including the end of prolonged deflation, changes in wage growth patterns, and the implementation of new economic policies aimed at fostering growth and addressing demographic challenges.

• Japan’s nominal GDP surpassed 600 trillion yen for the first time in history during the second quarter of 2024, marking a significant milestone after three decades of stagnation around the 500 trillion yen level.
• Real GDP growth in the second quarter of 2024 turned positive, driven by domestic demand, particularly private consumption and business investment.
• The country is moving beyond the ‘triple zeros’ era of near-zero inflation, nominal wage growth, and interest rates, signalling a shift towards a more normalised economic environment.
• Wages began to rise in 2023, with the spring 2024 wage negotiations resulting in record-high growth, contributing to increased real income.
• Japan’s inflation rate has been around 2-3% since November 2023, with the Bank of Japan ending unconventional monetary policies like quantitative easing and raising interest rates.
• The government has been actively promoting policies to encourage price pass-through and higher wages, particularly for small and medium-sized enterprises.
• Japan’s current potential growth rate is estimated to be around 0.6%, significantly lower than other countries, highlighting the need for measures to enhance productivity and stimulate investment.
• The country faces challenges related to its ageing population, but Japanese elderly are notably healthier compared to global averages, contributing to a high labour participation rate among older citizens.
• Efforts are being made to mobilise labour and capital towards more productive sectors, addressing issues such as labour market inefficiencies and the concentration of household assets in cash and deposits.
• The government is promoting various initiatives to boost potential growth, including encouraging investment in research and development, enhancing productivity, and improving labour market efficiency.