Economy of Japan
Overview
Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan advance with extraordinary rapidity to the rank of second most technologically powerful economy in the world after the US and the third-largest economy in the world after the US and China, measured on a purchasing power parity (PPP) basis.
One notable characteristic of the economy has been how manufacturers, suppliers, and distributors have worked together in closely-knit groups called keiretsu. A second basic feature has been the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features have now eroded. Japan's industrial sector is heavily dependent on imported raw materials and fuels. The tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self sufficient in rice, Japan must import about 55% of its food on a caloric basis.
Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of overinvestment and an asset price bubble during the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor.
From 2000 to 2001, government efforts to revive economic growth proved short lived and were hampered by the slowing of the US, European, and Asian economies. In 2002-07, growth improved and the lingering fears of deflation in prices and economic activity lessened, leading the central bank to raise interest rates to 0.25% in July 2006, up from the near 0% rate of the six years prior, and to 0.50% in February 2007. In addition, the 10-year privatization of Japan Post, which has functioned not only as the national postal delivery system but also, through its banking and insurance facilities as Japan's largest financial institution, was completed in October 2007, marking a major milestone in the process of structural reform.
Nevertheless, Japan's huge government debt, which totals 182% of GDP, and the aging of the population are two major long-run problems. Some fear that a rise in taxes could endanger the current economic recovery. Debate also continues on the role of and effects of reform in restructuring the economy, particularly with respect to increasing income disparities.
GDP
Real Growth Rate
2%
Per Capita
USD 33,600
From Agriculture
1%
From Industry
27%
From Services
72%
Labour Force
Available for Work
67
Working in Agriculture
5%
Working in Industry
28%
Working in Services
68%
Unemployment Rate
4%
Population Below Poverty Line
0%
Inflation Rate
0%
Investment as Percent of GDP
0%
Budget
Revenues
USD 1,448,000 (m)
Expenditures
USD 1,597,000 (m)
Public Debt
US$ 0.00 (m)
Agricultural Products
Rice, sugar beets, vegetables, fruit; pork, poultry, dairy products, eggs; fish.
Core Industries
Among world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods.
Exports
Value
USD 676,900 (m)
Commodities
Transport equipment, motor vehicles, semiconductors, electrical machinery, chemicals.
Partners
US 22.8%, China 14.3%, South Korea 7.8%, Taiwan 6.8%, Hong Kong 5.6% (2006).
Imports
Value
USD 572,400 (m)
Commodities
Machinery and equipment, fuels, foodstuffs, chemicals, textiles, raw materials.
Partners
China 20.5%, US 12%, Saudi Arabia 6.4%, UAE 5.5%, Australia 4.8%, South Korea 4.7%, Indonesia 4.2% (2006).
External Debt
USD 1,492,000 (m)
Fiscal Year
1 April - 31 March
