Investment activity may decline, contributing to a further erosion of NIRG. This perspective has a straightforward implication for monetary policy. When the economy is at or close to its NIRG, an increase in energy prices can trigger inflationary pressures, because there is high capacity utilization and producers can easily pass on higher energy prices to their consumers.
According to the June Tankan (Short-Term Economic Survey of Enterprises in Japan), firms seem to have increased their fixed investment this fiscal year, as they did last fiscal year.