Summary
For the fourth year in a row, real wages in Japan have dropped in 2025.
The country has struggled with long-running economic stagnation, marked by weak GDP growth, persistent deflation, and a weak yen. But there are recent signs of revival. The Nikkei has hit record highs, and wages are rising.
The catalyst is the landslide election victory of Prime Minister Sanae Takaichi, who has championed “Sanaenomics”—a mix of proactive fiscal spending, structural reforms, and stimulus to boost growth.
Yet internal and external headwinds could stall this economic momentum.
The public, particularly the young, have pinned their hopes for an economic revival on the new government. Will Prime Minister Takaichi’s decisive mandate translate into a new era of growth, or will these signs of life sputter out?
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