Tokyo is the world's largest urban economy and most populous city. Its substantial consumer base of 37 million people in 2016, boosted by a surging number of Chinese tourists, constantly lures leading retail brands. However, having been an enduring exception to Japan's demographic crisis, the city is set to witness its population growth turn negative by 2021. A lack of young talent is already an obstacle as some companies are sceptical about Tokyo's drive to become Asia's most prominent financia
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While Tokyo's GVA per employee (labour productivity) is 16% higher than in the rest of the country as of 2016, it is considerably behind other globally leading metropolitan economies. Tokyo's lower concentration of highly productive business services (eg finance) is a key reason for the gap.
Despite Tokyo's productivity advantage, annual disposable household income in Tokyo was only 12% higher than in the rest of Japan as of 2016. A smaller average household size in Tokyo compared to the rest of the country depresses household income.
Consumer expenditure (excluding housing and transport) per household was 8% greater in the city than in the rest of Japan in 2016. Consumers in Tokyo display a much greater inclination towards discretionary items such as education, hotels and restaurants, and healthcare than their counterparts elsewhere in the country.
Despite housing claiming a 38% higher expenditure per household in the city compared to the rest of the country in 2016, Tokyo's laissez-faire approach to housing construction helps to better contain real estate price increases than in other world-renowned cities. Meanwhile, transport is very affordable, with a 1% lower expenditure than elsewhere in Japan in 2016, due to a well-developed public transport system. Combined, transport and housing in Tokyo required 24% more expenditure in 2016 compared to the rest of the country.