While the outlook for many OECD countries remains subdued, Emerging Asia is set for healthy growth over the medium term. Annual GDP growth for the ASEAN -10, China and India is forecast to average 6.5% over 2015-19. Growth momentum remains robust in the 10 ASEAN countries, with economic growth averaging 5.6% over 2015-19.
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After two decades of low growth and persistent deflation, Japan is showing signs of renewed economic dynamism. But to regain its primacy as a leading economic powerhouse and raise the well-being of its citizens, Japan needs a structural reform package to narrow the productivity gap with leading OECD countries, notably by increasing the labour participation of women and older citizens.
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.
This working paper presents the background and the details of the simulations behind Box 1.4 of the May 2013 OECD Economic Outlook. A small simulation model is used to evaluate the contribution that the three pillars of the government’s strategy – fiscal consolidation, growth-boosting structural reforms and higher inflation – could make to reversing the rise in Japan’s public debt ratio.
The 2011 disaster and nuclear problems opened the door to a new energy policy, as they raised fundamental questions about the electricity system’s ability to prevent and respond to accidents.
The problems of Japanese agriculture – in particular low productivity and the prevalence of part-time farmers and small plots have been evident for the past 50 years.
With gross government debt surpassing 200% of GDP, Japan’s fiscal situation is in uncharted territory. In addition to robust nominal GDP growth, correcting two decades of budget deficits requires a large and sustained fiscal consolidation based on a detailed and credible multi-year plan that includes measures to control spending and raise revenue.