Economy of Japan

The economy of Japan is a highly developed free-market economy.[25] It is the third-largest in the world by nominal GDP and the fourth-largest by purchasing power parity (PPP).[26][27] It is the world's second-largest developed economy.[28] Japan is a member of both the G7 and G20. According to the World Bank, the country's per capita GDP (PPP) was at $40,193 (2020).[29] Due to a volatile currency exchange rate, Japan's GDP as measured in dollars fluctuates sharply. Accounting for these fluctuations through the use of the Atlas method, Japan is estimated to have a GDP per capita around $39,048. The Japanese economy is forecast by the Quarterly Tankan survey of business sentiment conducted by the Bank of Japan.[30] The Nikkei 225 presents the monthly report of top blue chip equities on the Japan Exchange Group, which is the world's fifth-largest stock exchange by market capitalisation.[31][32] In 2018, Japan was the world's fourth-largest importer and the fourth-largest exporter.[33] It has the world's second-largest foreign-exchange reserves, worth $1.4 trillion.[24] It ranks 5th on the Global Competitiveness Report.[34] It ranks first in the world in the Economic Complexity Index.[35] Japan is also the world's fourth-largest consumer market.[36]

Economy of Japan

Tokyo, the financial center of Japan
Currency	Japanese yen (JPY, ¥)
Fiscal year	1 April – 31 March
Trade organizations	APEC, WTO, CPTPP, OECD, G-20, G7 and others
Country group	Developed/Advanced[1] High-income economy[2]
Statistics
Population	125.88 million (1 October 2020 prov. est.)[3]
GDP	$4.921 trillion (nominal; 2022 est.)[4] $6.11 trillion (PPP; 2022 est.)[4]
GDP rank	3rd (nominal, 2022) 4rd (PPP, 2022)
GDP growth	–4.6% (2020) 1.7% (2021e) 1.7% (2022f) 1.3% (2023f)[5]
GDP per capita	$39,243 (nominal, 2022 est.)[4] $48,814 (PPP, 2022 est.)[4]
GDP per capita rank	26nd (nominal, 2022) 35rd (PPP, 2022)
GDP by sector	Agriculture: 1.1% Industry: 30.1% Services: 68.7% (2017 est.)[6]
GDP by component	Household consumption: 55.5% Government consumption: 19.6% Investment in fixed capital: 24% Investment in inventories: 0% Exports of goods and services: 17.7% Imports of goods and services: −16.8% (2017 est.)[6]
Inflation (CPI)	−0.1% (2020 est.)[4]
Population below poverty line	5.5% (2020) 0.7% on less than $1.90/day (2013)[7] 0.9% on less than $3.20/day (2013)[8] 1.2% on less than $5.50/day (2013)[9]
Gini coefficient	33.9 medium (2015)[10]
Human Development Index	0.919 very high (2019)[11] (19th) 0.843 very high IHDI ( 18th ) (2019)[12]
Labor force	68.7 million (August 2020)[13] 60.3% employment rate (August 2020)[14]
Labor force by occupation	Agriculture: 3% Industry: 25% Services: 72% (FY 2018)[15]
Unemployment	3.0% (August 2020)[13] 4.7% youth unemployment (15 to 24 year-olds; August 2020)[13] 2.1 million unemployed (August 2020)[13]
Main industries	Motor vehicles Electronics machine tools steel nonferrous metals ships chemicals textiles processed foods
Ease-of-doing-business rank	29th (very easy, 2020)[16]
External
Exports	$728.931 billion (2021)[17]
Export goods	Transport Equipment 21.0% Machinery 19.9% Electrical Machinery 18.7% Chemicals 12.4% Manufactured Goods 10.4% Raw Materials 1.7% Foodstuff 1.3% Mineral Fuels 0.8% Others 13.8%[18]
Main export partners	China 22.1%  United States 18.4%  ASEAN 14.4%  European Union 9.2%  South Korea 7.0%  Taiwan 6.9%  Hong Kong 5.0%  Australia 1.9% Others 15.1%[18]
Imports	$742.094 billion (2021)[17]
Import goods	Electrical Machinery 17.6% Mineral Fuels 16.6% Machinery 10.5% Foodstuff 9.9% Chemicals 9.9% Manufactured Goods 9.3% Raw Materials 6.9% Transport Equipment 5.0% Others 14.4%[18]
Main import partners	China 25.8%  ASEAN 15.7%  European Union 11.4%  United States 11.0%  Australia 5.6%  South Korea 4.2%  Taiwan 4.2%  Saudi Arabia 2.9% Others 19.2%[18]
FDI stock	$310.31 billion (December 2019)[18] Abroad: $1.858 trillion (December 2019)[18]
Current account	− $13.156 billion (2021)[17]
Public finances
Public debt	260% of GDP (2021 est.)[19]
Budget balance	−3.5% (of GDP) (2017 est.)[6]
Revenues	1.714 trillion (2017 est.)[6]
Expenses	1.885 trillion (2017 est.)[6]
Economic aid	donor: ODA, $10.37 billion (2016)[20]
Credit rating	Standard & Poor's:[21][22] A+ (Domestic) A+ (Foreign) AA+ (T&C Assessment) Outlook: Stable Moody's:[22] A1 Outlook: Stable Fitch:[22] A Outlook: Stable Scope:[23] A Outlook: Negative
Foreign reserves	$1.389 trillion (October 2020)[24]
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

Japan is the world's second-largest automobile manufacturing country.[37] It is often ranked among the world's most innovative countries, leading several measures of global patent filings. Facing increasing competition from China and South Korea,[38] manufacturing in Japan currently focuses primarily on high-tech and precision goods, such as integrated circuits, hybrid vehicles, and robotics.[39] Besides the Kantō region,[40][41][42][43] the Kansai region is one of the leading industrial clusters and manufacturing centers for the Japanese economy.[44] Japan is the world's largest creditor nation.[45][46][47] Japan generally runs an annual trade surplus and has a considerable net international investment surplus. Japan has the third-largest financial assets in the world, valued at $12 trillion, or 8.6% of the global GDP total as of 2020.[48][49] As of 2017, 51 of the Fortune Global 500 companies are based in Japan,[50] down from 62 in 2013.[51] The country is the third-largest in the world by total wealth.

Japan formerly had the second-largest assets and wealth, behind only the United States in both categories. In 2015, it was eclipsed by People's Republic of China in both assets and wealth.[52][53] Japan also had the world's second-largest economy by nominal GDP behind the United States. In 2010, it was eclipsed by People's Republic of China.[54]

Japan's asset price bubble collapse in 1991 led to a period of economic stagnation known as the "lost decade", sometimes extended to a "lost 20 years" or greater. From 1995 to 2007 GDP fell from $5.33 trillion to $4.36 trillion in nominal terms.[55] From the early 2000s, the Bank of Japan set out to encourage economic growth through a novel policy of quantitative easing.[56][57] Debt levels continued to rise in response to the Global Financial Crisis in 2007, the Tōhoku Earthquake and Tsunami and Fukushima Nuclear Disaster in 2011, and the COVID-19 pandemic from 2020. As of 2021, Japan has significantly higher levels of public debt than any other developed nation at approximately 260% of GDP.[58][19] 45% of this debt is held by the Bank of Japan.[58] The Japanese economy faces considerable challenges posed by an aging and declining population, which peaked at 128 million in 2010 and has fallen to 125.5 million as of 2022.[59] Projections show the population will continue to fall, potentially to below 100 million by the middle of the 21st century.[60][61]