Tourism has been boosted in recent years by the weaker yen, and benefitted from particularly strong Chinese tourism growth. Labour shortages are a significant problem, with the falling numbers of engineers and labourers, and an ageing population resulting in manpower shortages in most sectors of the economy.
Construction is strong but shortages of labour are driving up labour costs, especially in Tokyo. Land and real estate prices have also risen sharply in anticipation of the 2020 Olympic Games, possibly indicating a bubble forming in the city.
Infrastructure spend remains high, work has started on the maglev railway from Tokyo to Nagoya to run at 500km/h at a cost of USD48bn with 80 percent in tunnels.
Work starting on the new Kengo Kuma’s stadium for the 2020 Olympics has replaced the original Zaha Hadid design due to escalating costs and protests from other architects regarding the project’s sensitivity to the site.
The growth outlook is generally positive for Japan, as construction firms make solid profits. Labour shortages will continue to drive up costs, as discussions proceed on ways to reduce the ballooning cost of the Olympic venues.