Prime Minister Shinzo Abe has been working to jolt the world's third largest economy out of stagnation. His ambitious turnaround plan, known as Abenomics, aims to end years of deflation, leading to more robust growth.
Perhaps the biggest single factor in Japan's change of direction has been the country's central bank, led by Haruhiko Kuroda. Once reluctant to engage in unconventional monetary policy, the Bank of Japan has embraced Abe's vision, launching a massive bond-buying program.
Markets have responded in a dramatic way, with the yen falling 20% against the dollar in the past year. The Nikkei index of leading shares has added 60% over the same period.
A falling currency lowers the price of a country's exports, making them more attractive to international buyers by undercutting competitors, and some of Japan's flagship brands are already reaping the rewards.
Toyota(TM) raised its full year profit forecast by 12% last week, thanks to strong sales in the U.S. and the weaker yen. Other firms, including Honda and Hitachi, are also riding high on the weaker yen.
Still, it is too early to call Abenomics a complete success. Wages have not gone up by much, and promised structural reforms have been difficult to implement.
Abe's government has proposed measures that would make the labor market more flexible, encourage immigration, bring nuclear power plants back online and draw more Japanese women into the workforce.