Japan economic growth
Though displaced by China as the world’s second-largest economy, the Land of the Rising Sun’s iconic global brands and technological prowess, coupled with business-friendly political leadership will ensure Japan’s economic standing on the world stage doesn’t disappear anytime soon.
Shinzo Abe, Japan’s Prime Minister, was elected largely based on campaign promises to revive Japan’s economy- and those promises seem to have come to fruition.
Since his election in late 2012, Japan’s stock market index, the Nikkei 225, has grown by a staggering 145% percent (it measures the performance of 225 large, publicly owned companies from a variety of sectors). Japan’s GDP has also fared well, seeing growth in 21 of 25 quarters since 2013. Abe will remain in power until 2021 and his tenure will continue under majority mandate until then.
Abe’s economic reforms, like any meaningful reforms, have had to take stock of his country’s economic outlook. Of course, Japan owes some of its heretofore and continuing economic success to a massive population of over 127 million. That same population is ageing. Twenty-seven per cent of Japanese citizens are 65 years of age or older. While this factor might augur exceptionally poorly for some nations, Japan’s fate seems to be unaffected by that.
Between 2012 and 2017 employment in Japan increased by more than 2.7 million people. This, despite the working-age population declining by over 4 million. Thanks in part to Abenomics, there are now 1.5 job openings for every applicant in Japan. What’s more, Japan’s unemployment rate sits at a paltry 2.2% according to the September 28 2019 edition of The Economist.
Naturally, a nation’s present and future economic success is never owed to one single person. Japan has long been a cradle of high-tech before anyone had heard the term Abenomics. This proclivity toward technology should enable the country to make up for an ageing population by adopting AI before and more effectively than other nations. One estimate pegs Japanese private investment in the MLAI sector at around 600 billion Yen (approximately $5.5 billion USD) annually, which is similar to that of the U.S.
As it pertains to automation, Japanese adoption of AI robotics is already common. In addition to android-like restaurant staff, companies are employing human-like robots in a variety of industries. One nursing home, for instance, has used robots to fill staffing gaps in nursing care, rehabilitation, communication and recreation since 2013.
This cultural acceptance of AI and robotics, in conjunction with a labor system in Japan that protects mid-level workers (those whose jobs are most likely to be impacted by AI) should assuage fears of human replacement.
Furthering to Japanese economic strength, powerful global brands like Sony, Toyota, Mitsubishi and now Rakuten have become ubiquitous in the lives of people in every corner of the world. These brands became the successes they did thanks to cultural expectations around a dizzyingly high work ethic and a willingness to compete in the high-tech world.
Though cultural norms in Japan, much like anywhere, are adjusting, and its population is indeed ageing, Japan’s economy will continue to be one of the most revered in the world thanks to AI adoption and a political willingness to compete.
The confluence of these macro-economic and cultural factors makes the Land of the Rising Sun a ripe opportunity for brands across the world looking to expand their presence by entering a new market.
Interested in market entry in Japan through leading e-commerce channels? Contact firstname.lastname@example.org.