Despite the challenging global macro landscape in 2023, Japan saw a notable post-pandemic economic recovery with real GDP growth of 1.9 percent, surpassing its long-term average of 0.6 percent per year from 2003 through 2022. This was primarily underpinned by strong domestic spending and government stimuli, though challenges such as rising prices dampened private consumption in the second half of 2023. However, given the very robust job market and corporate profitability backdrop, and tax incentives for companies to increase wages, real wage growth is expected to turn positive in 2024, with the latest shunto wage negotiations confirming this trend. Combined with a large stimulus package designed to bolster household spending and business investment, this should add support to domestic demand, notably in the next one to two years.

In addition, two key themes worth highlighting would be the tourism sector and corporate reform. Post reopening of its borders, inbound tou