Is Japan enjoying a NICE period?

NICE stands for non-inflationary continuous expansion, those countries have high continuous growth but low inflation can be said that they are experiencing a NICE period.

The Bank of Japan has abandoned its plan to hit 2 per cent inflation target around 2019, this does not create a shock in the market as it is already believed. Japan has been experiencing a long period of low inflation, and the danger of deflation has threatened the Japanese economy for many times. The Bank of Japan has almost tried every channel to create inflationary pressure for its economy, and the 10-year government bond yield is capped at 0 per cent. Meanwhile, the Japanese wage growth had a surprising increase in March. According to the official report, the earnings (not adjusted for inflation) gained a 2.1 percent year-on-year rise. In general, when a country experiences a rise in wages, the economy should also expand. So wage has always been an important indicator for economic growth (almost equally important as the GDP growth).

Then we can see Japan has a low inflation rate and is likely to have a high economic growth, so maybe we should say Japan is experiencing a NICE period. It is undoubtedly that Japan is experiencing low inflation; however, its economic growth is questionable. The supporting rate of the Japanese Prime Minister is low due to several scandals. More importantly, his economic policies (often referred as Abenomics) has not been felt by many of the Japanese population. This might indicate that the wage growth may not be fairly shared by the entire Japanese population. Japan has actively tried to find more trade partners that China, Japan and South Korean are actively negotiating trade issues.

Overall, the Japanese economy might be partially qualified as NICE, but there is some uncertainty ahead Japan and the wealth distribution within the Japanese society could be questioned.