Japan’s economy grew 1.1% year over year in the first quarter of 2018.
The economy is expected to expand only slightly more than 1% per year in both 2018 and 2019. In that sense, the economy seems to have plateaued.
In this uncertain international economic environment, Japan’s firms are facing labor shortages, which will provide some upward momentum to wages and prices.
While nominal wages have been rising in this slow growth era, real wages have been falling in Japan, which is partly due to Japan having achieved a positive inflation rate.
The Bank of Japan is expected to continue with its expansionary monetary policy until the 2% inflation target is achieved. In May, the inflation rate was only 0.6%.
