How Japanese nominal GDP (finally) got its groove back
The story has been about the elusive inflation target, but in a quiet triumph for Abenomics, Japan has finally posted a new GDP record — its first in two decades
Tokyo — Hidden beneath the headlines about Japan’s continual failure to reach its inflation target is a quiet reflation of its economy. It took almost two decades, but Japan finally notched a record for the size of its economy in 2016, one of the most significant signs yet that Prime Minister Shinzo Abe’s reflation policies have had an impact on underlying fundamentals. Despite population declines in the order of more than a quarter of a million people a year, and in the face of muted productivity gains, Japan’s nominal GDP totaled ¥537-trillion ($6.1-trillion) last year, government data showed on Monday. Last year was the first time that nominal GDP, which is unadjusted for price changes, hit a record since 1997. The good news: domestic demand contributed to the gains, with business investment outpacing the GDP rise, and both consumption and government spending playing their part. The bad news: most of the increase came from exports climbing more than imports. This could be a probl...
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