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Japan's New Golden Age

October 17, 2018

Dr. Jesper Koll, Chief Executive Officer, WisdomTree Investments

Founder and CEO of WisdomTree Investments and long-time Japan strategist/economist Jesper Koll visited the school for a discussion on Japan’s economic growth over the last two decades and the future prospects of its economy.

Koll offered insights on the forces driving Japan’s economic recovery and explained why he felt very optimistic about the country’s future.

He stated that Japan has contributed strongly to growing its economy despite the fact that it lost more financial assets due to the collapse of its bubbled economy than it lost during World War II. He pointed out that a structural—rather than cyclical—virtuous cycle of higher incomes, higher fertility rate and better access to credit is kicking in Japan’s domestic system.

Koll spoke highly of Japan’s strong government, and noted that people often talk about Japan’s deflation by neglecting the fact that it might be prompted by Tokyo’s ruthless efforts to tame inflation. Japan has cut health care and pharmaceutical prices, as well as provider prices for the last eight consecutive years, which lead to higher purchasing power of people, he said.

In regard to Japan’s ever aging population, Koll argued that the demography is a tailwind rather than a headwind. He believes that Japan is in a demographic sweet spot because of the shortage of labor. For the first time in 30 years, full-time employment is rising.

On the international stage, Koll said that Japanese companies’ increasing earnings from overseas and decreasing cross-shareholdings proves that Japan has become more dependent on the rest of the world. However, he noted that while the country’s productivity in manufacturing is strong, the service sector is lagging behind due to low capital intensity.

Questions from the audience ranged from the impact of women’s empowerment, immigration integration, growth engines within an aging society, and how young people’s lack of willingness to become entrepreneurs would affect the potential of the economy.

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