Japan’s Strategic Awakening

Goldman Sachs

Hidehiro Imatsu, Yu Itoki

Research

9 Pages

Goldman Sachs explores why Japan’s economic revival appears more durable than previous cycles, driven by governance reform, policy normalization, and geopolitical realignment. They argue that structural changes—not monetary stimulus alone—are reshaping investment opportunities, while nearly half of Tokyo’s top-tier listed companies still trade below book value despite accelerating corporate reforms.

Key Takeaways

Structural transformation: Japan's defense spending has roughly doubled to 2% of GDP, while policy rates have normalized to ~1.0%, reinforcing long-term economic change.
Governance catalyst: Nearly 50% of Tokyo's top-tier listed companies still trade below book value, creating opportunities for activism, M&A, and private equity.
AI productivity: Japan plans to invest more than ¥370 trillion ($2.3 trillion) across 17 strategic sectors over 14 years, supporting AI, energy, and industrial competitiveness.
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