Skip to main content

Rebound in productivity growth has further to run

The unexpected 0.5% q/q rise in GDP and the 3% q/q plunge in total hours worked in the first quarter meant that productivity rose at its fastest pace in nearly four years. That makes sense because firms have been responding to capacity shortages and the tightness of the labour market with higher investment spending. Software investment in particular climbed to a record high last year as firms adopted new internet and AI technologies. With business investment set to remain high relative to output, productivity growth will probably remain strong. While that’s positive for Japan’s growth prospects, it will make it even more difficult for the Bank of Japan to hit its 2% inflation target.

Become a client to read more

This is premium content that requires an active Capital Economics subscription to view.

Already have an account?

You may already have access to this premium content as part of a paid subscription.

Sign in to read the content in full or get details of how you can access it

Register for free

Sign up for a free account to gain:

  • Unlock additional content
  • Register for Capital Economics events
  • Receive email updates and economist-curated newsletters
  • Request a free trial of our services


Get access