Raising growth potential of Japan’s economy and monetary policy In order to achieve sustainable economic growth, Japan’s economy inevitably should tackle the challenges to raising medium-term growth potential, on top of overcoming deflation. As I have noted, the potential growth rate in Japan is estimated to have declined to around 0.5 percent or lower.
Taking a shrinking population as a given, an overall increase in labor productivity will be a key to raising the potential growth rate. In this sense, looking ahead, a 6  BIS central bankers’ speeches  structural reform needs to be promoted not only in an economic context but also in a social context, and should focus on developing a productivity-enhancing mechanism and environment.