The population is shrinking. The economy is stagnant. Unless you're talking about volcanic activity, how is Japan "growing"?

japan=japanese=lifeforms and all lifeforms grow to occupy thier niche, which is not a linear process humans are unique amongst lifeforms in that our technological capabilities have created biological advantages that have increased the size of our availible niche, but there is no way to determine when and how an inevitable balance will occur........so perhaps the Japanese have been giving each other some serious side eye and have come to some sort of unaknowledged agreement

If the population is shrinking and the economy is stagnant, that would mean that overall the average wellbeing of a person in that population has increased, no?

Economy is stagnant because i don't they have much left to achieve maybe as well

It should be obvious: it is possible to reach a stable state. Growth is not the only option, or always desirable.

true itself. Once you are developed and everyone is earning good enough to sustain and they are not interested in crap things. Things get really stable indeed.