There are strong winds blowing in Japan. People might think this refers to the developing political situation as the nation braces for the Oct. 22 Lower House election. True, it is extremely important to assess the movements — to see what kind of government will emerge as a result. However, Japan's economy is now awash in two more important winds of a global scale.
One is perhaps best characterized as turbulence. A series of unexpected events last year — ranging from the Brexit decision by the United Kingdom to leave the European Union to the surprise election of Donald Trump as president of the United States — had a major impact on the economy.
Symbolic of this impact were the rumblings on the stock market. The Tokyo Stock Exchange's Nikkei 225 average, which began 2016 at around 18,400 points, fell below 15,000 in the wake of the Brexit vote in late June. Then Trump's upset win in November — and his announcement of a massive fiscal stimulus plan, featuring $8 trillion in tax cuts and infrastructure investments over 10 years — triggered the "Trump rally" in stock markets, with the Nikkei closing the year above 19,100. The Tokyo market had dropped 20 percent in the first six months of 2016 — only to surge 28 percent in the rest of the year.