Economic Trends/Outlook in Japan

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Economic Overview

Japan, being the second world's economy, was one of the countries most affected by the international economic crisis, due to its strong dependence on exports. The country entered into recession in 2008 (-1.2% of growth) and in 2009 (-5.2%), mainly due to a decline of the economic activity in the United States (its number one trade partner), in Europe (which attracts 15% of the total exports from the country) and in Asia (mostly in China). Moreover, the price rise in energy and food products has contributed to the drop of the domestic demand. Supported by the dynamism of the Chinese economy, Japan's growth, estimated at 2.8%, has rebounded in 2010, stimulated by exports as well as the resurgence of private consumption.

The perspectives for 2011 were less optimistic due to the slowdown in exports and a less favorable business climate. The earthquake that hit Japan on March 11, 2011 and the tsunami that followed led to a more negative review of these estimates. The cost of the disaster is expected to exceed 300 billion USD, not to mention the significant concerns regarding the nuclear power plant in Fukushima, whose consequences are not yet well known. According to experts, the Japanese economy should not recover before 2012.


The government's general balance-sheet is experiencing a huge deficit and the level of the state's net-debt is very important. They account for 3.7% and almost 200% of GNP respectively. Due to these reasons, the government has announced restrictions on budgetary and monetary policies. A priority is also given to the environment, to the social system and a policy favoring the increase of birth rate. In a long term, the problem of the ageing of the population will also increase the pressure on expenditures.

The unemployment rate had declined until 2007, but it increased again under the effects of the crisis, it remains moderate at about 5%.

Main Indicators 2009 2010 2011 2012 2013
GDP (billions USD) 5,032.98 5,458.87e 5,821.95e 5,920.56e 6,058.06e
GDP (Constant Prices, Annual % Change) -6.3 3.9e 1.4e 2.1e 1.7e
GDP per Capita (USD) 39,459e 42,820e 45,659e 46,507e 47,679e
General Government Balance (in % of GDP) -7.0e -7.5e -8.3e -7.4e -7.3e
General Government Gross Debt (in % of GDP) 216.3e 220.3e 229.1e 233.4e 238.0e
Inflation Rate (%) -1.4 -0.7e 0.2e 0.2e 0.4e
Unemployment Rate (% of the Labor Force) 5.1 5.1e 4.9e 4.7e 4.5e
Current Account (billions USD) 141.66e 149.73e 131.05e 116.94e -
Current Account (in % of GDP) 2.8e 2.8e 2.4e 2.1e -

Source: IMF - World Economic Outlook Database

Note: (e) Estimated Data


Main Sectors of Industry

Japan has few natural resources (some deposits of gold, magnesium, coal and silver), therefore, it depends from exports to supply itself with raw materials and energy resources.  Having a large maritime area, the country is one of the first producers of halieutic (fishing) products. Only 15% of Japan's surface is suitable for cultivation. Tea and rice are the two main crops. The agricultural economy is highly subsidized and protected. Agriculture contributes marginally to the GNP and employs less than 5% of the active population.

The industrial sector is very diversified and it covers basic products (steel, paper), as well as high technology products. Japan dominates the sectors of automobile, robotics, biotechnology, nanotechnology and renewable energy. Japan is the world’s second producer of cars and ships. The industrial sector contributes to nearly 30% of the GNP.


The service sector accounts for more than two thirds of the GDP and employs two thirds of the active population.

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 4.2 27.9 66.7
Value Added (in % of GDP) 1.5 28.0 70.6
Value Added (Annual % Change) 4.9 1.8 2.6

Source: World Bank - Last Available Data.

For more detailed background on Industries in Japan, click here.

Indicator of Economic Freedom

Mostly free
World Rank:
Regional Rank:

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation


Country Risk

See the Country Risk Analysis Provided By Ducroire.


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