Japan's real GDP slumped in 2014. But nominal GDP actually grew by almost 2%. The difference between real and nominal GDP growth is the GDP deflator. An increase in nominal GDP means that the Bank of Japan's monetary easing appears to be working. For inflation to be sustained, it will be necessary for wages to rise, and for some structural reforms to take place.
About the authors
Economist Insights is written by Joshua McCallum and Gianluca Moretti. Joshua has been working at Global Asset Management with the title of Senior Fixed Income Economist since 2005. Prior to this, he worked at the UK Treasury as a macroeconomist. Gianluca joined Global Asset Management in 2010. Prior to this he worked at the Italian central bank.
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