The world of economics is in a constant state of flux and has shifted from an essentially US-based focus to Asia's point of convergence. After many years of driving economic growth, the pull of global wealth has shifted and is now largely concenrated in this region, and we analyse its structural success.
Japan's economy contracted less than predicted thought in the last quarter of 2015, surprising analysts. Gross domestic product narrowed to an annualised rate of 1.1 per cent for the period, while our analysts had been expecting to see a contraction of 1.5 per cent or above.
Japan has long been struggling to revitalise its flagging economy, which has be fraught with deflationary worries for nearly 20 years.
On a quarterly basis, the world's third biggest economy has shrunk 0.3% and the contraction for quarter ended December adds to a succession of setbacks for the government's economic reform policy.
Prime Minister Shinzo Abe's plan was to revive the economy and combat deflation, as well as boost demand and investment.
In so doing, the Bank of Japan introduced a negative interest rate of -0.1%. This is the first time ever Japan has been driven into negative territory and aimed at increasing spending and investment to boost economic growth. This week, Japan's benchmark Nikkei 225 was down 0.4% in early trading.
All of this is bad news for Prime Minister Shinzo Abe and hcentral bank governor Haruhiko Kuroda. There has been a lot of talk surrounding the Abenomics project and the Bank of Japan's massive money printing project has been described as a "money-spewing bazooka". However, Governor Kuroda has repeatedly said he will do "whatever it takes" to defeat 20 years of deflation. But the core of Abenomics is not reflation, it is weakening the yen, the Japanese currency.
While Japan has a mature economy, it also has a rapidly ageing and shrinking population and its domestic companies are old, hierarchical and run by old men who are resistant to change. None of this suggests the country is about to discover any fire in its belly.
Jonathan is a portfolio manager and senior analyst responsible for research on emerging market economies in Asia. He has 30 years of extensive experience, with special emphasis on Japan and China. Over the last 12 years, he has overseen a number of emerging market research teams.