Japan’s long weak yen no longer lifts the whole economy. Production has moved abroad, so depreciation mainly helps a few multinationals while importers, households and SMEs face cost-push inflation on energy, food and materials—without strong demand or matching wage growth.

Ultra-easy BoJ policy widened rate gaps with other economies and kept the yen weak. Households spend more on essentials and cut discretionary buying; many SMEs cannot pass on costs, lose margins fast, and delay investment because of thin cash buffers and cautious lenders.

The author wants gradual rate normalization, targeted fiscal relief (subsidies, tax cuts for lower-income households), productivity and labour-market reform, easier SME finance and consolidation, plus more women, older workers and managed foreign labour. Lasting growth needs structural change, not a permanent cheap-yen, easy-money loop.

Japan is at a crossroads and faces a multitude of challenges that threaten its very existence. A prolonged weak yen, in combination with persisting inflation as well as mounting pressure on its productive base all issues that have been masked by decades of extremely loose monetary policy reveals the country’s deep-seated structural problems. While short-term normalization of monetary policy is required, Japan’s economic structure of a country heavily dependent on imports is threatened by cost-push inflation, moreover of a different nature than the typical demand-driven inflation seen in other developed markets, all in the absence of a sustainable uptrend in domestic demand.

The problems of Japan’s economy today are centred on the weak yen that has been prolonged for a long time. At first, it seemed that depreciation of the yen would be good for the country’s exports, but as time has passed, the effects of currency devaluation have become peculiar. A great number of major Japanese companies have transferred production to other countries, so that,........

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