Economic Growth in Japan
Japan's GDP growth over the last decade was well below the G7 average. The economy struggled with an aging, declining population and deflationary pressures, despite fiscal and monetary stimulus. The COVID-19 pandemic caused a significant downturn. Long-term growth prospects remain 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 2024.
Source: Macrobond.
Japan GDP Data
2020 | 2021 | 2022 | 2023 | 2024 | |
---|---|---|---|---|---|
Economic Growth (GDP, ann. var. %) | -4.2 | 2.7 | 0.9 | 1.5 | 0.1 |
GDP (USD bn) | 5,054 | 5,035 | 4,262 | 4,211 | 4,024 |
GDP (JPY bn) | 539,646 | 553,068 | 560,464 | 591,913 | 609,433 |
Economic Growth (Nominal GDP, ann. var. %) | -3.3 | 2.5 | 1.3 | 5.6 | 3.0 |
Economy tops market expectations in Q4
Print more than doubles market expectations: GDP growth gained steam to 2.8% in seasonally adjusted annualized rate terms (SAAR) in the fourth quarter, up from 1.7% in the third quarter and exceeding market expectations. On an annual basis, economic growth picked up to 1.2% in Q4, following the previous period's 0.6% increase and marking the best result since Q2 2023. As a result, the economy eked out a 0.1% expansion over 2024 as a whole, dodging a contraction by a hair’s breadth.
Private spending remains resilient but shows signs of weakness: Q4’s print suggests that the Bank of Japan’s push to establish a “virtuous cycle” between higher wages and spending continues to bear fruit, with private consumption growing 0.5% in Q4 as salaries adjusted for inflation soared 6.3%. That said, this marked the weakest expansion in private spending since Q1 2024 (Q3: +3.0% SAAR). This suggests consumers may be struggling with high inflation and rising interest rates, as does the reading for imports of goods and services, which contracted 8.0% in Q4 (Q3: +8.1% SAAR). Looking at other components of domestic demand, government consumption increased 1.1% (Q3: +0.5% SAAR), while fixed investment bounced back by 1.1% (Q3: -0.8% SAAR). Finally, exports of goods and services increased 4.3% on a SAAR basis in the final quarter, which was below the third quarter's 6.1% expansion. However, because imports shrank, the contribution of net trade to GDP growth rose to 3.0 percentage points.
Panelist insight: EIU analysts said: “With downside risks aplenty, both monetary and fiscal policy must remain accommodating for Japan’s household consumption and corporate investment to maintain the positive momentum.” Nomura’s Yuki Kodera and Kyohei Morita commented: “Labor leaders, business leaders, and labor economists responding to a survey [by the Institute of Labour Administration] conducted between 2 December 2024 and 16 January 2025 collectively forecast a wage hike of +4.6% in the 2025 spring wage negotiations (shunto), which would be lower than the +5.3% hike realized in the spring of 2024. We at Nomura expect that the wage hike will ultimately be larger than the survey participants have forecast.”
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 54 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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