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  • Writer's pictureAdam German

Japan's economic renaissance and long-term trends according to Jesper Koll

On December 23rd, the American Chamber of Commerce in Japan (ACCJ) Journal published an article by prominent Japan economist Jesper Koll that focused on Japan’s unique demographic structure and what it could look like moving forward. 

Demographics are a primary driver of residential property markets and understanding the fundamental drivers of demographics is a must.  An increasing demographic means more buyers and more buyers mean higher prices.  The inverse is true too which is why demographics are so important. 

According to Mr. Koll, 2023 saw a renewed interest in Japanese companies emerging globally due to factors like a favorable exchange rate and a revitalized leadership approach. 

Beyond this surge, several long-term trends are shaping sustainable opportunities in Japan;

Japan's aging business owners (over 70 years old) lacking successors are driving a wave of mergers and acquisitions, offering significant chances for global companies to consolidate and expand their market share.

With Japanese households holding about $30 trillion in wealth, a substantial portion of it, around $5-6 trillion, is expected to become accessible over the next decade, potentially boosting the purchasing power of the younger generation and driving domestic demand.

The competition for talent in Japan is escalating as younger generations seek more responsibility and impact. Companies emphasizing merit-based compensation and transparent career paths are likely to thrive, leading to increased productivity and employee incomes.

Japan's transition into an immigration hub is evident as non-Japanese residents are on the rise, with eased visa requirements and a shift towards merit-based compensation. By 2030, an estimated 10% of employees in Japan could be non-Japanese, fostering diversity and innovation.

These trends, driven by demographic changes, signal a fundamental shift: industries consolidating for efficiency, unlocking household wealth, empowering scarce labor, and attracting global talent. These shifts promise stability and continued opportunities in Japan's economic landscape, marking a substantial, enduring change rather than a passing phase.

Read the full article at the link below courtesy of the ACCJ.



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