The one unaccounted for piece in the puzzle is wage growth, said Bell.
“Realistically, you would expect to see more signs of wage growth already. It’s a bit of a quandary – with the tightening of the labour market, why are you not seeing pick up in wage growth?”
Setting aside the anomalous behaviour of wage inflation, Bell does not identify any other major risks for Japan on the horizon.
“The biggest risk to the Japanese economy in the medium term is either a recession in US, which we don’t think is likely in the next 12 months, or a meaningful slowdown in the Chinese economy.
“Our view is the Chinese economy is going to slow but it will be manageable and Japan should be able to grow relatively healthily regardless.”
Given the current economic data coming out of the region, it does seem overly generous to claim that Japan has overcome its period of paralysis.
But, it similarly seems misguided to view the strides made under Abe as just another “false dawn.”
As F&C multi-manager co-head Rob Burdett, who is currently overweight Japan, put it: “At the very least Abenomics supported the conditions that led to the Japanese equity market being well placed, even if it doesn’t achieve his goal in total.”