Japón 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.

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%.

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.