Mount Fuji, Japan

Japan Economy

Japan economic overview

A large but fading economic presence:

Japan has the world's third-largest economy by nominal GDP. That said, Japan's relative economic weight has dimmed since the 1980s, when Japan was the world's second-largest economy and was closing the gap with the U.S.

Industrial powerhouse:

Japan's industrial sector is at the heart of its economic strength, particularly in automotive, machinery, robotics and electronics manufacturing. Companies like Toyota, Sony, and Panasonic are global household names, reflecting the country's reputation for quality and innovation. Japan's manufacturing approach, known for its efficiency and the pioneering of practices like ‘Just-In-Time' production, has been influential worldwide.

Services dynamism:

The service sector, including banking, insurance, retailing, transportation, and telecommunications, forms a significant part of Japan's economy. Tokyo, a key global financial center, hosts some of the world's largest investment banks and insurance companies.

Prices and interest rates:

Japan is unique among major economies in having repeatedly suffered deflation over the last decade. As a result, Japan's central bank has kept interest rates in negative territory for a prolonged period, and by end-2023 was the only major central bank to still have interest rates below 0%.

Demographic- and debt-related challenges:

Japan has the world's second-most aged population, which has been in decline for over a decade due to a rock-bottom birth rate, and is forecast to continue falling in the coming years. Moreover, the country's public debt is the world's highest as a share of GDP, though fiscal stability risks are mitigated by the fact that most of the debt is denominated in yen and held by local institutions.

Japan's economic outlook:

Over the next few years, the government will likely focus on continuing to stimulate domestic demand, boosting defense spending against a backdrop of a more assertive China, increasing the currently-low female force participation rate, and investing in digitization and clean industries. However, our Consensus is for sub-1% growth over the forecast horizon in light of the dismal demographic situation. In the medium term, our Consensus is for inflation to dip back to well below the central bank's 2.0% target, although the country should avoid the deflation that was often present in the 2010s.

Japan's economy in numbers:

Nominal GDP of USD 4,256 billion in 2022.

GDP per capita of USD 34,001 compared to the global average of USD 10,589.

Average real GDP growth of 0.7% over the last decade.

Share of the region's population
Share of the region's GDP

Economic structure:

In 2020, services accounted for 70% of overall GDP, manufacturing 20%, other industrial activity 9%, and agriculture 1%. Looking at GDP by expenditure, private consumption accounted for 54% of GDP in 2020, government consumption 21%, fixed investment 25%, and net exports 0%.

GDP by economic sector
GDP by type of expenditure

International trade:

In 2021, manufactured products made up 86% of total merchandise exports, mineral fuels 1%, food 1%, ores and metals 4% and agricultural raw materials 1%, with other categories accounting for 7% of the total. In the same period, manufactured products made up 58% of total merchandise imports, mineral fuels 20%, food 10%, ores and metals 9% and agricultural raw materials 2%, with other goods accounting for 1% of the total. Total exports were worth USD 751 billion in 2022, while total imports were USD 874 billion.

Key exports
Key imports
Key export partners
Key import partners

Economic growth:

The economy recorded average annual growth of 0.6% in the decade to 2022. To read more about GDP growth in Japan, go to our dedicated page.

Fiscal policy:

Japan's fiscal deficit averaged 5.6% of GDP in the decade to 2021. Find out more on our dedicated page.


The unemployment rate averaged 3.1% in the decade to 2022. For more information on Japan's unemployment click here.


Inflation averaged 0.7% in the decade to 2022. Go to our Japan inflation page for extra insight.

Monetary Policy:

Japan's monetary policy rate ended 2022 at -0.10%, down from 0.10% a decade earlier. See our Japan monetary policy page for additional details.

Exchange Rate:

From end-2012 to end-2022 the yen weakened by 34.4% vs the U.S. dollar. For more info on the yen, click here.
The economy unexpectedly entered a technical recession in Q4. Despite doing so less steeply than in Q3, GDP continued to contract, with private spending, public expenditure and fixed investment all declining. The reading suggests that the recent bout of high inflation has hurt domestic demand more than earlier anticipated, making a rate hike by the Bank of Japan in March or April less likely. More positively, exports grew more sharply, pointing to the nascent global recovery in trade seen in the quarter. Turning to Q1, our panelists expect the economy to weakly rebound as domestic demand picks up. Looking at available data, business conditions in the services sector picked up in January–February, while those in the manufacturing sector worsened. Meanwhile, in January, annual merchandise exports growth beat expectations.
Projections out to 2033.

54 indicators covered including both annual and quarterly frequencies.

Consensus Forecasts based on a panel of 56 expert analysts.

Want to get insight on the economic outlook for Japan in the coming years? FocusEconomics collects projections out to 2033 on 54 economic indicators for Japan from a panel of 56 analysts at the leading national, regional and global forecast institutions. These projections are then validated by our in-house team of economists and data analysts, and averaged to provide one Consensus Forecast you can rely on for each indicator. This means you avoid the risk of relying on out of date, biased or outlier forecasts. Our Consensus Forecasts can be visualized in whichever way best suits your needs, including via interactive online dashboards , direct data delivery and executive-style reports which combine analysts' projections with timely written analysis from our in-house team of economists on the latest developments in the Japan economy. To download a sample report on the Japan's economy, click here . To get in touch with our team for more information, fill in the form at the bottom of this page .

Japan Economic Data

2018 2019 2020 2021 2022
Population (million) 126 126 126 126 125
GDP (USD bn) 5,040 5,117 5,056 5,030 4,256
GDP per capita (USD) 39,846 40,542 40,173 40,079 34,001
GDP (JPY bn) 556,630 557,911 539,808 552,571 559,710
Economic Growth (Nominal GDP, ann. var. %) 0.6 0.2 -3.2 2.4 1.3
Economic Growth (GDP, ann. var. %) 0.6 -0.4 -4.1 2.6 1.0
Domestic Demand (ann. var. %) 0.6 0.0 -3.3 1.5 1.5
Private Consumption (ann. var. %) 0.2 -0.6 -4.4 0.8 2.2
Government Consumption (ann. var. %) 1.0 1.9 2.4 3.4 1.7
Private Non-Residential Inv. (ann. var. %) 2.3 -0.7 -4.9 0.5 1.9
Government Investment (ann. var. %) -0.1 2.9 5.5 -7.9 -5.5
Fixed Investment (ann. var. %) 0.6 0.5 -3.6 -0.1 -1.4
Exports (G&S, ann. var. %) 3.8 -1.5 -11.6 11.9 5.3
Imports (G&S, ann. var. %) 3.8 1.0 -6.8 5.1 7.9
Industrial Production (ann. var. %) 0.6 -2.7 -10.4 5.4 -0.2
Nominal Retail Sales (ann. var. %) 1.7 0.1 -3.4 2.0 2.6
Unemployment (% of active population, eop) 2.5 2.2 3.1 2.7 2.5
Unemployment (% of active population, aop) 2.4 2.4 2.8 2.8 2.6
Fiscal Balance (% of GDP) -2.5 -3.0 -9.1 -6.2 -
Public Debt (% of GDP) 232 236 259 255 260
Inflation (CPI, ann. var. %, eop) 0.3 0.8 -1.2 0.8 4.0
Inflation (CPI, ann. var. %, aop) 1.0 0.5 0.0 -0.2 2.5
Inflation (Core, ann. var. %, eop) 0.8 0.8 -1.1 0.6 4.0
Inflation (Core, ann. var. %, aop) 0.9 0.6 -0.2 -0.2 2.3
Inflation (PPI, ann. var. %, aop) 2.6 0.2 -1.2 4.6 9.8
BOJ Policy Rate (%, eop) -0.10 -0.10 -0.10 -0.10 -0.10
TONAR (%, eop) -0.06 -0.07 -0.03 -0.02 -0.02
10-Year Bond Yield (%, eop) 0.00 -0.03 0.02 0.07 0.41
Stock Market (ann. var. of Nikkei 225, %) -12.1 18.2 16.0 4.9 -9.4
Exchange Rate (JPY per USD, eop) 110 109 103 115 132
Exchange Rate (JPY per USD, aop) 110 109 107 110 132
Current Account Balance (USD bn) 176.6 176.6 149.8 195.6 81.5
Current Account Balance (% of GDP) 3.5 3.5 3.0 3.9 1.9
Merchandise Trade Balance (USD bn) 13 -1 25 16 -123
Merchandise Exports (USD bn) 736 697 629 749 751
Merchandise Imports (USD bn) 723 698 604 733 874
Merchandise Exports (ann. var. %) 7.0 -5.2 -9.8 19.1 0.2
Merchandise Imports (ann. var. %) 12.4 -3.5 -13.4 21.4 19.1
Foreign Direct Investment (USD bn) 10.0 13.8 10.7 24.7 32.5


  1. Will Germany's economy surpass Japan's?

  2. Germany's GDP is projected to surpass Japan's in 2023 as the world's third-largest economy in nominal GDP terms at market prices. However, Japan's economy is still robust and could regain its footing in the future.

  3. Is Japan doing well economically?

  4. Japan's recovery from Covid-19 has been robust, driven by factors such as strong exports—with a weakening yen making exports more competitive—and a modest rebound in domestic demand. However, the economy still faces challenges such as an aging population and a large public debt.

  5. What type of economy does Japan have?

  6. Japan has a mixed economy. It features a highly developed market, with significant government intervention and protectionism in some sectors. This blend allows for both economic growth and social welfare, making Japan one of the world's leading economic powers.

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