Despite having a sizeable output gap, Japan’s economy has expanded at a pace no stronger than potential this year so slack in the economy has not been reduced. One reason is that consumer spending has been flat since 2014’s sales tax hike. Even though the labour market has continued to tighten, wage growth has been range-bound since early 2015. However, there are some glimmers of hope. As a result of prolonged retrenchment, the household saving rate has jumped to a multi-year high, and we see good chances of a rebound in consumer spending.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services