Economic Growth in Japan
apan's GDP growth from 2013-2022 was well below the G7 average. The economy struggled with an aging population and deflationary pressures, despite fiscal and monetary stimulus. The COVID-19 pandemic caused a significant downturn. Long-term growth prospects remained subdued, highlighting the need for structural reforms to address demographic and productivity challenges.
The economy of Japan recorded an average growth rate of 0.6% in the decade to 2022, below the 1.8% average for Major Economies. In 2022, real GDP growth was 1.0%. For more GDP information, visit our dedicated page.
Japan GDP Chart
Note: This chart displays Economic Growth (GDP, annual variation in %) for Japan from 2014 to 2023.
Source: Macrobond.
Japan GDP Data
2019 | 2020 | 2021 | 2022 | 2023 | |
---|---|---|---|---|---|
Economic Growth (GDP, ann. var. %) | -0.4 | -4.2 | 2.7 | 1.2 | 1.8 |
GDP (USD bn) | 5,117 | 5,054 | 5,035 | 4,272 | 4,222 |
GDP (JPY bn) | 557,911 | 539,646 | 553,151 | 561,766 | 593,428 |
Economic Growth (Nominal GDP, ann. var. %) | 0.2 | -3.3 | 2.5 | 1.6 | 5.6 |
GDP contracts in Q1
According to a preliminary reading, GDP contracted 2.0% in seasonally adjusted annualized rate (SAAR) terms in Q1 2024, undershooting market expectations. The contraction was largely due to one-off factors, including an earthquake in Tokyo plus a safety-testing scandal at a Toyota subsidiary. The statistical release also revised down Q4 2023’s result to flat from a 0.4% increase and revised Q3 2023’s contraction up to 3.6% from 3.2%, painting an increasingly glum picture of the country’s recent economic performance. On an annual basis, economic activity declined 0.2% in Q1, contrasting the previous period's 1.2% expansion and marking the largest downturn in three years.
The downturn reflected deteriorations in private consumption, fixed investment and exports. Household spending contracted 2.7% in Q1, marking the steepest decline in two years (Q4 2023: -1.5% SAAR) and the fourth consecutive fall in a row, pointing toward the impact of recently high inflation on purchasing power. Meanwhile, fixed investment worsened, contracting 1.0% in Q1, contrasting the 3.8% expansion in the prior quarter. On the external front, exports of goods and services fell 18.7% on an SAAR basis in the first quarter, contrasting the fourth quarter's 11.6% expansion. More positively for GDP, public spending rebounded, growing 0.8% in Q1 (Q4 2023: -0.6% SAAR). In addition, imports of goods and services deteriorated, contracting 12.8% in Q1 (Q4 2023: +7.3% SAAR), marking the biggest decline since Q2 2023.
ING analysts commented: “We believe that the disruptions of car production and sales due to a safety scandal have distorted the overall growth figures and expect a technical payback in 2Q24. Monthly activity data already shows a gradual normalization since March.” Analysts at Goldman Sachs said: “We set our real GDP tracking estimate for 2024Q2 at +2.9%: The first estimate of 2024Q1 real GDP growth highlighted the weakness of private-sector and external demand. For 2024Q2, we expect consumption to rebound to +3.5% qoq annualized, as durable goods consumption recovers, especially spending on autos. We also see a recovery in capex. We expect exports and imports to turn up to +9.0% and +5.5% respectively, from large declines in Q1. Among export items, we see goods exports rebounding but inbound spending slowing modestly.”
How should you choose a forecaster if some are too optimistic while others are too pessimistic? FocusEconomics collects Japanese GDP projections for the next ten years from a panel of 58 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. By averaging all forecasts, upside and downside forecasting errors tend to cancel each other out, leading to the most reliable GDP forecast available for Japanese GDP.
Download one of our sample reports to visualize what a Consensus Forecast is and see our Japanese GDP projections.
Want to get access to the full dataset of Japanese GDP forecasts? Send an email to info@focus-economics.com.
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