Investing in Japan: Is There Light at the End of the Tunnel?

Most people have given up on investing in Japan. With an aging population and far too much government debt, the conventional wisdom is that Japan will never again see the vigorous economic growth it once enjoyed. The earthquake and tsunami of March 2011 only reinforced this view. However, that tragic episode did have another side. It showed the resilience and discipline of Japanese society. There was almost no looting, for example -- and recent economic data suggest that the Japanese economy is not as dead as it seemed. First quarter Japanese gross domestic product (GDP) came in at an annual growth rate of 4.1% --far higher than the United States, Canada, Australia, or anywhere in the Eurozone. Given that Japan has been in perpetual near-recession for 21 years, with no surges of productivity like the U.S. enjoyed in the late 1990s, it's really not a bad performance. You can also see Japan's true strength from its exchange rate, which is currently 79 yen to the dollar, up from around 120 five years ago. That makes visiting Tokyo very expensive. However, it's also sign of a highly competitive economy.