Japan: Deflation over?

The economic expansion–the longest in Japan’s post-war history–continues despite some deceleration in the pace of growth since early 2007. A further tightening of the labour market is projected to reverse the decline in wages, helping to sustain output growth of some 1.5-2% in 2008-09 and pushing inflation into positive territory.
The Bank of Japan should not raise the short-term policy interest rate further until inflation is firmly positive and the risk of renewed deflation becomes negligible. It is essential to achieve the target of a primary budget surplus by fiscal year 2011 as a first step in reducing the public debt to GDP ratio. This requires spending cuts and a comprehensive tax reform. Structural reforms are needed to boost productivity, particularly in the service sector, which would help maintain living standards by offsetting the accelerated fall in the working-age population.



©OECD Observer No. 264/265, December/January 2008

OECD Economic Outlook No. 82, December 2007  
Visit www.oecd.org/japan
All OECD Observer articles on Japan



Economic data

GDP growth: -1.8% Q1 2020/Q4 2019
Consumer price inflation: 0.9% Apr 2020 annual
Trade (G20): -4.3% exp, -3.9% imp, Q1 2020/Q4 2019
Unemployment: 8.4% Apr 2020
Last update: 9 July 2020

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Digital Editions

Don't miss

Most Popular Articles

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2020