The long-suffering Japanese economy may be finally on the up. At the end of last year, former prime minister Shinzo Abe was re-elected on a mandate to take dramatic economic stimulus measures to promote much-needed growth in the north Asian nation.
Japan's economy grew significantly in the decades following the second world war as it rebuilt its severely damaged infrastructure and industry, and it became the world's second largest economy in 1978. However, a rapid rise in asset prices led to a dramatic stock market crash in 1992, which has been followed by persistent low growth or recession, exacerbated by an ageing population, the onset of the global financial crisis in 2008, high national debt, and the 2011 earthquake and its effects.
Since Abe's return to office, Japan has doubled its inflation target to two per cent, which will give the economy significantly more room to grow before anti-inflationary measures are taken. The Bank of Japan, the nation's central bank, has also embarked on an asset purchasing programme, a tactic used by governments to inject funds into an economy.
These moves have gone down well with foreign investors. Since the end of 2012, foreign investors have put nearly £18 billion of new funds into Japanese companies, and the share prices of flagship corporates such as Sony and Toyota have recently rocketed.
And it shouldn't be forgotten that Japan has remained a significant economic force during its "lost decades" - it wasn't until 2010 that China's economy exceeded Japan's in size, and Japan is currently still the world's third largest economy behind only China and the US. Despite a lack of natural resources, it's one of the world's most formidable manufacturing nations, particularly in the automobile and high-tech sectors. A deeply-rooted culture of saving means that the nation's financial institutions hold a large slice of the world's financial assets, and Japan nearly always runs a trade surplus, though is running at a deficit at the moment due in part to a continued need to import energy following disruption to the nuclear power industry caused by the 2011 earthquake.
But despite its underlying strengths, rallies in Japanese economic growth in recent years have often quickly faltered, and a recent survey by professional services firm PwC showed that Japanese chief executives were some of the most pessimistic in the world about future prospects for their companies.
Thinking like a banker
One of the effects of the Japanese central bank's asset purchasing programme should be a fall in the value of the yen, as this step effectively increases the amount of yen in circulation. A fall will be welcomed by Japanese exporters as it will make their goods cheaper abroad, thus boosting sales and strengthening the economy as a whole. However, aggressive political action to force a yen devaluation will be frowned upon by Japan's trading partners and could lead to a competitive devaluation "currency war", as has threatened to erupt between the US and China.
Thinking like a lawyer
Law and reorder
Japanese shareholders and regulators have fewer legal powers and are much less firm with companies' management than they are elsewhere in the world. In addition, while large companies elsewhere are often required to appoint non-executive directors, Japanese conglomerates are not. These differences in corporate governance are not just legal technicalities; businesses need to be run effectively and to subject themselves to scrutiny in order to prosper- and if they don't, the health of the economy will suffer. And what are the chances of legal quotas for female board directors in Japan, as the EU is attempting to introduce to promote corporate health in Europe? Very low.
Thinking like an accountant
Saving the day?
Japan's traditional culture of saving is less evident these days at a household than at a corporate level - unlike Japanese families, businesses here still tend to hold large reserves of cash. As a cautious accountant, I generally approve of saving, but high corporate savings also mean low corporate investment in Japan's economy, leaving it stagnant and dangerously reliant on exports to grow. It's a different story for the Japanese government - Japan's level of national debt in relation to GDP is one of the highest in the world, greater than that of Greece, and a bit more saving here would certainly help the economy.
Thinking like a consultant
Very big business
The Japanese business world is dominated by keiretsu, conglomerates with divisions operating in a wide range of different areas - Mitsubishi, one of the biggest, operates in banking, insurance, steel, chemicals, and car manufacturing, as well as a number of other areas. Key advantages include easy access to finance, as most include a banking arm. They also benefit from synergies, economies of scale, and the fact that their weight allows them significant influence on government economic policy. They are prone, however, to be unwieldy operators and tend to be reluctant to innovate and change.