Could Japan become the world’s next great growth story? Billionaire and legendary investor Warren Buffett seems to think so. And the International Monetary Fund expects the Japanese economy to grow by 1.4% in 2023 – an impressive figure for a country whose population has steadily declined for the past 14 years.

But the Japanese economy could also be a ticking time bomb. Its labour market is tight, inflation remains stubbornly high despite the introduction of gasoline subsidies, and the yen’s real exchange rate has reached a three-decade low. After decades of maintaining near-ze...