Since the collapse of the bubble economy in the early1990s, Japan’s nominal GDP has remained largely flat, mainly due to the fall in the GDP deflator, which reflects changes in the overall price level of goods and services, and deflation.
Both real GDP, representing the volume of economic activity, and the GDP deflator, which measures price changes, have expanded. The long-anticipated achievement of the government’s target of a nominal GDP of 600 trillion yen, set in 2015, is finally within reach.
We conducted an analysis of how nominal GDP growth would affect businesses and households, considering factors such as the recent increase in the GDP deflator, households’ expectations of price inflation, and income prospects.