With gross government debt of 219% of GDP in 2016, Japan’s fiscal situation is in uncharted territory and puts the economy at risk.
Never in the past 30 years has productivity growth been lower than since the 2008 global financial crisis, and never has income inequality been higher than it is today in Japan, and in the OECD area
Labour productivity in Japan is about a quarter below the average of the top half of OECD countries, which is surprising given Japan's outstanding performance in education and skills and high level of R&D spending.
While growth has picked up, more needs to be done for Japan to overcome a record high government debt ratio and an accelerating decline in its working-age population.
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This country note from Going for Growth 2017 for Japan identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
With gross government debt of 226% of GDP, Japan’s fiscal situation is in uncharted territory and puts the economy at risk. Japan needs a detailed and credible fiscal consolidation plan, including specific revenue increases and measures to control spending to restore its fiscal sustainability.
Innovation is key to boosting economic growth in the face of a rapidly ageing population. While Japan spends heavily on education and R&D, appropriate framework conditions are essential to increase the return on such investments by strengthening competition, both domestic and international, and improving resource allocation.
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This country note from Going for Growth 2015 for Japan identifies and assesses progress made on key reforms to boost long-term growth, improve competitiveness and productivity and create jobs.
The productivity level in services relative to manufacturing is particularly low in Japan, dragging down economy-wide labour productivity, which is significantly below the average of the upper-half of OECD countries.
The Japanese economy is recovering after having suffered severe shocks from the 2008 financial and economic crisis and the 2011 Great East Japan Earthquake.