The most recent OECD Economic Survey of Japan forecasts that the Japanese economy will grow by approximately 1.5% in 2013 and 2014. The report is broadly supportive of Prime Minister Shinzo Abe’s approach to economic management, including an aggressive monetary policy and a flexible fiscal policy.

The Survey also observes that addressing Japan’s extremely high debt levels remains a critical barrier to long term growth. Japan’s gross public debt is currently 220% of GDP, which is the highest level ever recorded in an OECD nation. Through a series of tax increases and spending cuts, the OECD believes that Japan should return to fiscal surplus by 2020.

Regulatory reform is also viewed as a key means of promoting growth. In particular, the OECD report recommends that liberalization of the highly protected agricultural sector, which currently receives significant government support, should be a major priority. Labour market reforms are also considered essential in increasing female workforce participation and overcoming the challenge of Japan’s aging population.