On Jan. 1, 2024, typically the quietest day of the year in Japan, a powerful earthquake struck off Ishikawa, triggering a tsunami and ultimately leading to some 500 deaths. The following day, 379 people on board miraculously escaped from the flames of Japan Airlines Flight JL516, which struck a smaller craft at Tokyo’s Haneda airport, just minutes after I myself had landed there.
The tragedy and triumph set the tone for what was an unusually intense 12 months. It was a time of political upheaval, a most unexpected new prime minister — and some of the country’s most iconic brands becoming acquisition targets. The Nikkei 225 Stock Average set both its first record high in more than 30 years, and its biggest one-day drop since 1987, while the central bank raised rates for the first time in 17 years.
Perhaps no one sums it up more than baseball prodi y Shohei Ohtani, who got married, then became embroiled in a gambling scandal that briefly seemed to threaten his career, before cementing his place as the country’s greatest athlete following a World Series-winning first season with the Los Angeles Dodgers.
No doubt 2025 has more surprises in store — here’s what I’m looking at.
Ishiba’s Tightrope Act
Few would have guessed that Shigeru Ishiba would be prime minister going into 2025. After electoral disaster, he has avoided the ignominy of becoming Japan’s shortest-lived leader ever. But hopes for a lengthy spell in office remain dim. First on his agenda will be a high-stakes meeting with President elect Donald Trump, following his humiliating failure to secure it immediately after the US election. He must try to rekindle some of the relationship Trump enjoyed with Ishiba’s great political rival, Shinzo Abe, when the two meet as rumored in the coming months.
Ishiba’s job is safe until he finalizes the budget for the next fiscal year around March. After that, upper house elections in July could mean the knives come out for him in the Liberal Democratic Party. A potential change in leader could also trigger a snap vote in the lower house, a double-election strategy leaders have occasionally used in the past. And whoever is in office in August will preside over the 80th anniversary of the e d of World War II, likely to be a tricky time for relations in Asia, especially if South Korea elects current opposition leader Lee Jae-myung to replace impeached President Yoon Suk Yeol.
The Greatest Show on Earth
It’s a big year for Japan’s second city of Osaka, which will host the World Expo from April. The event is still big business in this part of the world, considered to have the prestige of hosting a World Cup or Olympics, and Osaka’s first Expo in 1970 is remembered fondly as helping to cement the postwar country’s place on the world stage following the Tokyo Olympics four years earlier.
History is repeating with this event following the Tokyo Games in 2021. As I wrote last year, Osaka is enjoying something of a moment amid rapid redevelopment. Some 28 million visitors expected to attend the Expo can see that for themselves — along with its terrifying-or-cuddly mascot Myaku-Myaku.
Japan for Sale
Alimentation Couche-Tard Inc.’s audacious attempt to buy Seven & i Holdings Co. will reach its denouement in 2025. But regardless of what happens — a privatization of the 7Eleven operator seems to be the most likely option — the Rubicon has been well and truly crossed when it comes to Japanese M&A.
As evidenced by Hon Hai Precision Industry Co.’s recent, brief pursuit of Nissan Motor Co., almost anything is now possible in a market once seen as off-limits. Foreign investors will be examining all kinds of assets, both troubled and undervalued, with the tussle between KKR & Co. and Bain Capital for Fuji Soft Inc. offering just a taste of what’s to come. That threat will also increase pressure on boards to continue to boost corporate value in a market that’s still hugely cheap.
Big Sequels
It’s a big year for entertainment sequels. Nintendo Co. will soon lift the lid on its make-or-break successor to the Switch, with speculation rife that details will drop this month. Shares have recently been trading at record highs in anticipation, raising the stakes for the Kyoto firm to strike the right balance and convince gamers to upgrade.
On the big screen, there’s another sequel to a smash hit. The triumphant anime production Demon Slayer will return to theaters in 2025 in a trilogy of movies that will conclude the series. The first theatrical outing surprisingly took home Japan’s biggest-ever box office, and with the anime continuing to be one of the most-streamed shows, anticipation will be intense. It’s one of several high-profile animated expected in theaters in 2025, which is sure to be another bumper year for a genre that generated nearly $20 billion in global revenue in 2023, according to recent data from Parrot Analytics.
A New Decade
Last year, Japan began to cast off the vestiges of the Lost Decades: 2025 could mark the beginning of a new era.
I’m still skeptical that the recent trend of wage hikes will ever drive inflation the way the the Bank of Japan hopes. But two other trends — a chronic labor shortage and the continued surge in tourists — might be more important. Despite more than three years of rising prices, the government has resisted officially declaring deflation over. That’s an announcement that might come in the new year, along with further rate hikes, and perhaps a new narrative for the yen that could reverse the weakening trend.
Visit Bloomberg to read this article.
