Over a longer perspective, it is productivity growth that matters. By moving from the production of lowvalued-added and low-productivity activities to higher value-added higher-productivity ones, facilitated by flexible markets and appropriate policies, an economy can increase its export earnings and its command over internationally traded goods and services. It can also benefit from the increased efficiency of production of non-traded goods and services.
The Bank recognizes that Japan’s economy is faced with an extremely important challenge of emerging from deflation and returning to the sustainable growth path with price stability.