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Japan Economy Profile 2018

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Economy - overviewOver the past 70 years, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (slightly less than 1% of GDP) have helped Japan develop an advanced economy. Two notable characteristics of the post-World War II economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features have significantly eroded under the dual pressures of global competition and domestic demographic change.

Measured on a purchasing power parity basis that adjusts for price differences, Japan in 2017 stood as the fourth-largest economy in the world after first-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. For three postwar decades, overall real economic growth was impressive - a 10% average in the 1960s, 5% in the 1970s, and 4% in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the aftereffects of inefficient investment and the collapse of an asset price bubble in the late 1980s, which entailed considerable time for firms to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession four times since 2008.

Japan enjoyed an uptick in growth in 2013 on the basis of Prime Minister Shinzo ABE’s “Three Arrows” economic revitalization agenda - dubbed “Abenomics” - of monetary easing, “flexible” fiscal policy, and structural reform. Led by the Bank of Japan’s aggressive monetary easing, Japan is making modest progress in ending deflation, but demographic decline – a low birthrate and an aging, shrinking population – poses a major long-term challenge for the economy. The government currently faces the quandary of balancing its efforts to stimulate growth and institute economic reforms with the necessity of addressing its sizable public debt, which stands at 235% of GDP. To help raise government revenue, Japan adopted legislation in 2012 to gradually raise the consumption tax rate. However, the first such increase, in April 2014, led to another recession, so Prime Minister ABE has twice postponed the next increase, now scheduled for October 2019. Structural reforms to unlock productivity are seen as central to strengthening the economy in the long-run.

Scarce in critical natural resources, Japan has long been dependent on imported energy and raw materials. After the complete shutdown of Japan’s nuclear reactors following the earthquake and tsunami disaster in 2011, Japan's industrial sector has become even more dependent than before on imported fossil fuels. However, ABE’s government is seeking to restart nuclear power plants that meet strict new safety standards and is emphasizing nuclear energy’s importance as a base-load electricity source. In August 2015, Japan successfully restarted one nuclear reactor at the Sendai Nuclear Power Plant in Kagoshima prefecture, and several other reactors around the country have since resumed operations; however, opposition from local governments has delayed several more restarts that remain pending. Reforms of the electricity and gas sectors, including full liberalization of Japan’s energy market in April 2016 and gas market in April 2017, constitute an important part of Prime Minister Abe’s economic program.

In October 2015, Japan and 11 trading partners reached agreement on the Trans-Pacific Partnership (TPP), a pact that had promised to open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Japan was the second country to ratify the TPP in December 2016; the United States signaled its withdrawal from the TPP on January 23, 2017, and as of April 2017 the agreement has not gone into effect.
GDP (purchasing power parity)$5.405 trillion (2017 est.)
$5.325 trillion (2016 est.)
$5.27 trillion (2015 est.)
note: data are in 2017 dollars
GDP (official exchange rate)$4.884 trillion (2016 est.)
GDP - real growth rate1.5% (2017 est.)
1% (2016 est.)
1.1% (2015 est.)
GDP - per capita (PPP)$42,700 (2017 est.)
$41,900 (2016 est.)
$41,500 (2015 est.)
note: data are in 2017 dollars
Gross national saving27% of GDP (2017 est.)
27.2% of GDP (2016 est.)
27% of GDP (2015 est.)
GDP - composition, by end usehousehold consumption: 55.9%
government consumption: 19.5%
investment in fixed capital: 23.5%
investment in inventories: 0.2%
exports of goods and services: 17.8%
imports of goods and services: -16.8% (2017 est.)
GDP - composition by sectoragriculture: 1%
industry: 29.7%
services: 69.3% (2017 est.)
Population below poverty line16.1% (2013 est.)
Labor force67.77 million (2017 est.)
Labor force - by occupationagriculture: 2.9%
industry: 26.2%
services: 70.9% (February 2015 est)
Unemployment rate2.9% (2017 est.)
3.1% (2016 est.)
Unemployment, youth ages 15-24total: 5.1%
male: 5.7%
female: 4.5% (2016 est.)
Household income or consumption by percentage sharelowest 10%: 2.7%
highest 10%: 24.8% (2008)
Distribution of family income - Gini index37.9 (2011)
24.9 (1993)
Budgetrevenues: $1.678 trillion
expenditures: $1.902 trillion (2017 est.)
Taxes and other revenues34.3% of GDP (2017 est.)
Budget surplus (+) or deficit (-)-4.6% of GDP (2017 est.)
Public debt223.8% of GDP (2017 est.)
222.2% of GDP (2016 est.)
Inflation rate (consumer prices)0.4% (2017 est.)
-0.1% (2016 est.)
Central bank discount rate0.3% (31 December 2015)
0.3% (31 December 2014)
Commercial bank prime lending rate1.5% (31 December 2017 est.)
1.48% (31 December 2016 est.)
Stock of narrow money$6.426 trillion (31 December 2017 est.)
$5.651 trillion (31 December 2016 est.)
Stock of broad money$8.917 trillion (31 December 2017 est.)
$8.023 trillion (31 December 2016 est.)
Stock of domestic credit$13.63 trillion (31 December 2017 est.)
$12.11 trillion (31 December 2016 est.)
Market value of publicly traded shares$4.895 trillion (31 December 2015 est.)
$4.378 trillion (31 December 2014 est.)
$4.543 trillion (31 December 2013 est.)
Agriculture - productsvegetables, rice, fish, poultry, fruit, dairy products, pork, beef, flowers, potatoes/taros/yams, sugarcane, tea, legumes, wheat and barley
Industriesamong world's largest and most technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods
Industrial production growth rate1.4% (2017 est.)
Current Account Balance$175 billion (2017 est.)
$188.1 billion (2016 est.)
Exports$683.3 billion (2017 est.)
$634.9 billion (2016 est.)
Exports - commoditiesmotor vehicles 14.9%; iron and steel products 5.4%; semiconductors 5%; auto parts 4.8%; power generating machinery 3.5%; plastic materials 3.3% (2014 est.)
Exports - partnersUS 20.2%, China 17.7%, South Korea 7.2%, Hong Kong 5.2%, Thailand 4.3% (2016)
Imports$625.7 billion (2017 est.)
$583.5 billion (2016 est.)
Imports - commoditiespetroleum 16.1%; liquid natural gas 9.1%; clothing 3.8%; semiconductors 3.3%; coal 2.4%; audio and visual apparatus 1.4% (2014 est.)
Imports - partnersChina 25.8%, US 11.4%, Australia 5%, South Korea 4.1% (2016)
Reserves of foreign exchange and gold$1.217 trillion (31 December 2016 est.)
$1.233 trillion (31 December 2015 est.)
Debt - external$3.24 trillion (31 March 2016 est.)
$2.83 trillion (31 March 2015 est.)
Stock of direct foreign investment - at home$268.4 billion (31 December 2017 est.)
$238.4 billion (31 December 2016 est.)
Stock of direct foreign investment - abroad$1.548 trillion (31 December 2017 est.)
$1.363 trillion (31 December 2016 est.)
Exchange ratesyen (JPY) per US dollar -
111.1 (2017 est.)
108.76 (2016 est.)
108.76 (2015 est.)
121.02 (2014 est.)
97.44 (2013 est.)
Fiscal year1 April - 31 March

Source: CIA World Factbook
This page was last updated on January 20, 2018