Many commentators have dismissed the government’s 3% target for GDP growth as far too ambitious. But there are two key points that at least some have missed. First, the target applies to nominal income. The Bank of Japan has already committed to raising inflation to 2%. If this is achieved (obviously a big if), the government’s target translates into a figure of around 1% for real GDP growth. Second, the target is expressed in terms of income per capita, which sidesteps at least some of the headwinds from the adverse demographics.
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