GDP is to rise 1.5% next year but will moderate in the years to come.
While Japan experienced seven consecutive quarters of GDP growth and is poised to further enjoy a 1.5% expansion in its gross domestic product next year, the solid level of growth cannot be sustained as lack of productivity reforms will eventually lead to moderate 0.4% growth levels in real GDP for 2019 to 2026, according to BMI Research.
If Japan wants to sustain its current rate of real GDP, it has to roll out and implement productivity reforms in the face of a declining workforce.
BMI Research thus maintains its bearish long-term view of Japanese growth as loose monetary and fiscal policies continue to undermine efforts to improve productivity despite Prime Minister Shinzo Abe’s insistence that it is the only way the country can successfully manage its massive debt burden.
Moreover, structural reforms are likely focused on labour market adjustments which BMI views as having limited beneficial economic impact as it does not sufficiently address wage productivity concerns.
Do you know more about this story? Contact us anonymously through this link.