Given that the output gap has been historically large following the bursting of the global bubble, it would be unrealistic to expect that demand will recover to meet the existing supply capacity for goods and services, as that would mean a reemergence of a bubble economy.
Looking back on Japan’s history, the economy has grown by unlocking and capturing potential demand through various efforts and innovations undertaken by firms. 20 Besides the rapidly expanding demand in neighboring East Asian countries 21, potential demand in Japan is not inconsiderable in areas such as medical and nursing care, environmental conservation, and tourism.