Light at the end of a deflationary tunnel

JAPAN

Employment rates and wages are finally rising, as Japanese companies start to spend cash instead of holding it on balance sheets. Genzo Kimura, economist at Sumitomo Mitsui trust, asks if Japan's transformation is permanent

The end of Japan’s deflationary era has been greeted with more than a welcome sigh of relief. The new period of inflation is already having a positive impact on both employment and wage rates. Naturally, as these move up, improvements are being seen not just in the quality of living standards but also in a flurry of business activity, especially as the appeal of holding cash wanes significantly. In this new era, cash is no longer king. Curve correlation One of the most impressive changes since Prime Minister Shinzo Abe’s re-election in December 2012 has been the correlation betwe...