JAPANS ECONOMY

The economy of Japan is the third-largest in the world by nominal GDP and the fourth-
largest by purchasing power parity (PPP) and is the world's second largest developed economy.
Japan is a member of the G7. According to the International Monetary Fund, the country's per
capita GDP (PPP) was at $37,519, the 28th highest in 2014, down from the 22nd position in
2012.] Due to a volatile currency exchange rate, Japan's GDP as measured in dollars fluctuates
widely. Accounting for these fluctuations through use of the Atlas method, Japan is estimated to
have a GDP per capita of around $38,490.
Japan is the world's third largest automobile manufacturing country, has the largest electronics
goods industry, and 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, manufacturing in Japan today now focuses primarily on high-tech and precision goods,
such as optical instruments, hybrid vehicles, and robotics. Besides the Kantō region, the Kansai
region is one of the leading industrial clusters and manufacturing centers for the Japanese
economy. Japan is the world's largest creditor nation. Japan generally runs an annual trade
surplus and has a considerable net international investment surplus. As of 2010, Japan
possesses 13.7% of the world's private financial assets (the third largest in the world) at an
estimated $13.5 trillion. As of 2015, 54 of the Fortune Global 500 companies are based in Japan,
down from 62 in 2013.
Japan has the highest ratio of public debt to GDP of any developed nation. However, the national
debt is predominantly owned by Japanese nationals. The Japanese economy faces considerable
challenges posed by a declining population. Statistics showed an official decline for the first time
in 2015, while projections suggest that it will continue to fall from 127 million down to below 100
million by the middle of the 21st century. The Japanese economy is forecasted by the Quarterly
Tankan survey of business sentiment conducted by the Bank of Japan. The Nikkei 225 presents
the monthly report of top Blue chip (stock market)equities on Japan Exchange Group.

Macro-economic trend

Real GDP growth rate from 1956 to 2008

Quarterly change in the real GDP (blue) and the unemployment rate (red) of Japan from 2000 to 2010.

This is a chart of trend of gross domestic product of Japan at market prices estimated by
the International Monetary Fund with figures in millions of Japanese Yen. See also
 PPP capita
Price Nominal per-
Gross domestic US dollar GDP
Year index capita GDP
product exchange (as % of
(2000=100) (as % of US)
US)

1955 8,369,500 ￥360.00 10.31 –

1960 16,009,700 ￥360.00 16.22 –

1965 32,866,000 ￥360.00 24.95 –

1970 73,344,900 ￥360.00 38.56 –

1975 148,327,100 ￥297.26 59.00 –

1980 240,707,315 ￥225.82 100 105.85 71.87

2005 502,905,400 ￥110.01 97 85.04 71.03

2010 477,327,134 ￥88.54 98 89.8 71.49

For purchasing power parity comparisons, the US dollar was exchanged at ￥109 in 2010.

GDP composition
Industries by GDP value-added 2012 Values are converted using the exchange rate on 13 April
2013.

Industry GDP value-added $ billions 2012 % of total GDP

Other service activities 1,238 23.5%

Manufacturing 947 18.0%

Real estate 697 13.2%

Wholesale and retail trade 660 12.5%

Transport and communication 358 6.8%

Public administration 329 6.2%

Construction 327 6.2%

Finance and insurance 306 5.8%

Electricity, gas and water supply 179 3.4%

Government service activities 41 0.7%

Mining 3 0.1%

Total 5,268 100%

Japan Economic Outlook

Following a slowdown in private non-residential investment, growth in the second quarter was
revised down to 2.5% in seasonally-adjusted annualized terms, significantly below the 4.0%
figure reported in a preliminary estimate. Despite this revision, the print marked the fastest
expansion since Q1 2015 and puts the economy on a steady track to recovery. The latest data
suggests that healthy growth is being sustained in the third quarter. Machinery orders rebounded
in July, and exports had the fastest pace of expansion in almost four years in August. Strong
economic momentum and a splintered opposition compelled Prime Minister Shinzo Abe to hold
snap elections on 22 October in a bid to consolidate his grip on power. Unlike in previous
elections, the prime minister is not expected to postpone an unpopular 10% sales tax hike
projected in 2019 to lower astronomical public debt, despite the adverse effects it could have on
private consumption and economic growth.
Japan Economy Data
2012 2013 2014 2015 2016

Population (million) 128 127 127 127 127

GDP per capita (USD) 48,746 40,110 38,346 34,425 39,089

GDP (USD bn) 6,218 5,107 4,875 4,371 4,960

Economic Growth (GDP, annual variation in %) 1.5 2.0 0.3 1.1 1.0

Domestic Demand (annual variation in %) 2.3 2.4 0.3 0.7 0.4

Consumption (annual variation in %) 2.1 2.4 -0.9 -0.4 0.4

Investment (annual variation in %) 3.5 5.0 2.7 0.1 1.0

Exports (G&S, annual variation in %) -0.1 0.7 9.3 3.0 1.1

Imports (G&S, annual variation in %) 5.5 3.2 8.3 0.7 -2.3

Industrial Production (annual variation in %) 0.2 -0.6 2.1 -1.2 -0.2

Retail Sales (annual variation in %) 1.8 1.0 1.7 -0.4 -0.6

Unemployment Rate 4.3 4.0 3.6 3.4 3.1

Fiscal Balance (% of GDP) -9.0 -8.5 -6.2 -5.4 -

Public Debt (% of GDP) 201 202 200 197 199

 2012 2013 2014 2015 2016

Money (annual variation in %) 2.6 4.2 3.6 3.1 3.9

Inflation Rate (CPI, annual variation in %, eop) -0.2 1.7 2.4 0.1 0.3

Inflation Rate (CPI, annual variation in %) -0.1 0.4 2.8 0.8 -0.1

Inflation (PPI, annual variation in %) -0.9 1.2 3.2 - -

Policy Interest Rate (%) 0.10 0.10 0.10 0.10 -0.10

Stock Market (annual variation in %) 22.9 56.7 7.1 9.1 0.4

Exchange Rate (vs USD) 86.75 105.3 119.7 120.3 116.9

Exchange Rate (vs USD, aop) 79.84 97.63 105.9 121.1 108.8

Current Account (% of GDP) 1.0 0.9 0.8 3.1 3.8

Current Account Balance (USD bn) 59.6 45.8 37.1 134 187

Trade Balance (USD billion) -87.3 -117.5 -122.4 -23.3 37.0