Japanse real GDP is growing at a modest rate, which is remarkable in light of a huge share of older generations and the lower birth rate. It is because productivity is increasing… apparently.
Judging from the business judgement trend data above, the non manufacturing sectors are experiencing consistently positive signs in their businesses, hotels, restaurants and other consumer services in particular. As is well known, productivity in hese service sectors is very hard to measure, because their quality does not remain the same and defies attempts to quantify it.
This brings about a fundamental question: What part of the apprent growth (which is service sector driven) is “real”, as opposed to the nomial growth which eflects inflation? And there is no convincing answer to this question.
If so, it would be more appropriate to attribute the current service sector driven growth not to the elusive “productivity” but to possible “branding effects” of the Japanese service sector which enables service providers to charge higher prices for overseas customers, in particular.