Government data last month showed that Japan's economy shrank in the first three months of 2018 due to weaker export growth, business investment and private consumption. The annualized contraction of 0.6 percent put a stop to the nation's longest growth streak since the 1980s, demonstrating that the economy is still in need of key structural reforms.
Despite having accomplished growth over the past eight quarters — it was the first contraction since the final quarter of 2015 — the January-March figures show the difficulty of achieving continued growth and escaping over two decades of stagnation without implementing fundamental changes to its economy.
An example is wages. While the government's aggressive monetary easing and fiscal stimulus measures have helped lift the economy out of deflation, the Bank of Japan's stated goal of a 2 percent annual inflation will prove difficult without implementing policies that promote wage growth.