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It's been growing painfully slowly, while the government has accumulated a huge pile of debt.
Most recently, Standard & Poors, one of the world's biggest credit-rating agencies, even cut Japan's rating from an AA- to an A+.
(Although that's still investment grade, the cut suggests that the S&P is flagging major concerns about the economy.)
Even with a lumpy economy, improved efficiency could lead to some good things down the road in Japan, argued Morgan Stanley's chief investment officer Michael Wilson at a press briefing on Tuesday.
"Japan is quite interesting in our mind because Japan has a cyclical impulse, but also has a potentially structural change with Abenomics, [the government's] three-prong strategy of monetary policy, fiscal stimulus, and, of course, corporate governance and change at the micro level," he said.
According to Wilson, that third "arrow" of Abenomics in particular - the structural economic reform - is "very misunderstood still, under-appreciated."
As he explained during the event:
"Japan looks a lot like US companies in the 1980's, where there's a lot of low-hanging fruit where they can actually generate earnings growth even with very low economic growth because they've under-managed their companies for so long. They're the worst managed companies in the world - and I can attest to that, too. I have experience in the semi-conductor industry and technology companies in the last twenty years. But that's changing - slowly! And it's going to affect change that could take five or ten years down the road."
In other words, Japanese companies have a lot of room to make their operations more efficient and productive. The subsequent boost to profit margins would translate into profit growth despite stagnant or perhaps declining sales. A few structural tweaks could make a difference over the next several years.
That's great news as those growing profits eventually make their ways back into the ailing economy.