In the time horizon of two to three years, a growth rate is dominated by changes in demand, except in periods following supply-side shocks such as earthquakes. However, in terms of an average growth rate in the time horizon of 10 to 20 years – namely, the medium- to long-term growth potential – it is natural to consider that key determinants are supply-side factors.
Real GDP can be expressed as a product of “the number of workers” and “real GDP per worker.” As a corollary, the real GDP growth rate can be understood as the sum of the rate of increase in the number of workers and the labor productivity growth rate. Using these simple figures, I would like to highlight the following facts.