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
CurrencyJapanese yen (JPY, ¥)
1 April – 31 March
Trade organizations
APEC, WTO, CPTPP, OECD, G-20, G7 and others
Country group
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
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
GDP by sector
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]
−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]
33.9 medium (2015)[10]
Labor force
  • 68.7 million (August 2020)[13]
  • 60.3% employment rate (August 2020)[14]
Labor force by occupation
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
29th (very easy, 2020)[16]
External
Exports $728.931 billion (2021)[17]
Export goods
Main export partners
Imports $742.094 billion (2021)[17]
Import goods
Main import partners
FDI stock
  • $310.31 billion (December 2019)[18]
  • Abroad: $1.858 trillion (December 2019)[18]
− $13.156 billion (2021)[17]
Public finances
260% of GDP (2021 est.)[19]
−3.5% (of GDP) (2017 est.)[6]
Revenues1.714 trillion (2017 est.)[6]
Expenses1.885 trillion (2017 est.)[6]
Economic aiddonor: ODA, $10.37 billion (2016)[20]



  • 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]


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