Japan shifts economic agenda from stimulus to structure

With a shrinking population and rapidly aging society, Japan is moving away from demand-deficient conditions of the post-bubble era toward structural economic policies.

A Japan Times commentary outlines Japan's economic agenda shifting from stimulus measures to structural reforms. This change is driven by a shrinking population and rapidly aging society, departing from the demand-deficient conditions that marked much of the post-bubble era. Keywords include Sanae Takaichi, COVID-19, BOJ, AI, yen, Japanese economy, and Forex. The piece was published on March 18, 2026.

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Tokyo Stock Exchange traders celebrate as Nikkei 225 surpasses 58,000 amid expectations for PM Sanae Takaichi's economic stimulus policies.
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Japan's Nikkei breaks 58,000 on Takaichi policy expectations

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Japan's Nikkei average surpassed 58,000 for the first time following the Liberal Democratic Party's landslide election victory. Expectations for Prime Minister Sanae Takaichi's economic stimulus measures are driving the market, though fiscal concerns linger.

Japan's government has revised upward its economic forecast for the fiscal year ending next March, projecting acceleration in growth the following year due to a massive stimulus package boosting consumption and capital expenditure. The latest projections, approved by the cabinet on Wednesday, expect 1.1% expansion in the current fiscal year. Growth is forecasted at 1.3% for fiscal 2026.

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The world entered 2026 amid intense upheaval and uncertainty. The year 2025 marked a significant shift in the international economic order that had sustained 80 years of postwar prosperity. Japan, positioned uniquely between the strengthening powers of the United States and China, must leverage its distinct characteristics to build its own strategy.

Japan's Nikkei share average rallied ahead of Prime Minister Sanae Takaichi's snap lower house election on February 8, driven by a weaker yen and positive polls for her Liberal Democratic Party. Voters are prioritizing inflation countermeasures, while an AI-doctored campaign video has raised concerns over electoral fairness.

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As China enters the first year of its 15th Five-Year Plan, policymakers are prioritizing underlying stability and balance over mere growth rates. Recent measures include targeted fiscal support and incentives for care services. This approach aims to foster sustainable development amid global uncertainties.

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Japan's rice policy stands at a crossroads as prices for the staple food remain at record highs, straining households. In August 2025, then-Prime Minister Shigeru Ishiba declared a shift to boost production, but his successor Sanae Takaichi reversed this in October, opting to keep output aligned with demand.

 

 

 

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