Signs of hope in the future

There has been a good degree of hand-wringing at the state of Japan's economy among economists, opposition political parties and in the media, but there is equally a sense that changes in society here will open up greater economic opportunities for Japanese firms.

Despite problems that range from a vast national debt, an ageing population and diplomatic disputes with its neighbours that impact Japanese firms' activities, the optimists say that there are already signs of a rejuvenated Japan.

"It's happening right now," says Jesper Koll, head of research for JP Morgan in Japan. "Domestically, the most exciting thing for me is that we are seeing the end of wage deflation as the baby boomers are now retired," he says.

"These are the people who are in the demographic sweet spot of being in their late 30s or early 40s, and where we will see wage growth accelerate very rapidly. Seeing this old guard leaving and the new guard arriving makes this a very exciting opportunity for Japan."

One of the key barometers that Koll - an optimist on the state of the Japanese economy - points to is the market for homes, a function of increasing pay packets. For seven consecutive months, he points out, there has been positive growth in mortgage lending.

"And there are those who might say that is simply a result of the reconstruction in the northeast after last year's earthquake and tsunami," he says. "But that would be wrong. The increase in mortgage applications is in Tokyo, Osaka, Nagoya, Fukuoka, the urban centres where people want to live, they want to work and they want to have their homes."

Another critical element in Japan's favour, Koll believes, is its vast reserves of patents and intellectual property rights. Research spending in Japan accounts for 3.5 per cent of gross domestic product, making it the highest in any of the advanced global economies.