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flag Japan Japan: Economic and Political Outline

In this page: Economic Indicators | Foreign Trade in Figures | Sources of General Economic Information | Political Outline

 

Economic Indicators

Japan, world's third largest economy, is very vulnerable to the global economic situation, due to its strong dependence on exports. In the recent years, its economy has experienced periods of recession due to the slowdown of the global economy and the earthquake and the following tsunami which it experienced in 2011. In 2013, growth remained weak (1%) with a shortfall in domestic demand and exports well below their potential. For 2014, the outlook remains equally grim (1.2%) and consumption seems to be affected by the rise in VAT>

In 2013, the proactive policy led by the prime minister Shinzo Abe, whose goal was to help the country overcome deflation, contributed to the economy's stability. Three stimulus measures have been implemented: a massive support for economic activity worth 132 billion euro; an agressive monetary policy aiming to reduce inflation to below 2% in two years; and a deregulation of the labour market. The 2014 budget contains measures aiming to mitigate the potential negative impact of the rise in VAT such as an increase in public spending in the areas of public works, social security and defense. It will be partially funded (43%) by the emission of new state bonds. The budget, which should reach more than 941 billion USD, has been criticized by the opposition as unlikely to remedy the country's financial ills, given that its state debt already exceeds 200% of the GDP. The Central Bank is trying to fight against deflation which has lasted for over 15 years. Population aging and political tensions with China and South Korea are also a source of concern.

The unemployment rate increased under the effects of the crisis, but it remains moderate at about 5%.

 
Main Indicators 20112012201320142015 (e)
GDP (billions USD) 5,905.635,937.864,898.534,769.80e4,881.91
GDP (Constant Prices, Annual % Change) -0.51.51.5e0.90.8
GDP per Capita (USD) 46,17546,5313837,540e38,522
General Government Balance (in % of GDP) -8.3-7.6e-7.6e-6.7-5.5
General Government Gross Debt (in % of GDP) 229.8237.3e243.2e245.1e245.5
Inflation Rate (%) -0.3-0.00.42.72.0
Unemployment Rate (% of the Labor Force) 4.64.34.03.73.8
Current Account (billions USD) 126.4758.6833.63e45.42e54.92
Current Account (in % of GDP) 2.11.00.71.01.1

Source: IMF - World Economic Outlook Database , Last Available Data

Note: (e) Estimated Data

Main Sectors of Industry

Japan has few natural resources (some deposits of gold, magnesium, coal and silver), therefore, it depends from exports to supply itself with raw materials and energy resources.  Having a large maritime area, the country is one of the first producers of halieutic (fishing) products. Only 15% of Japan's surface is suitable for cultivation. Tea and rice are the two main crops. The agricultural sector is highly subsidized and protected. Agriculture contributes marginally to the GNP and employs less than 4% of the active population.

The industrial sector is very diversified and it covers basic products (steel, paper), as well as high technology products. Japan dominates the sectors of automobile, robotics, biotechnology, nanotechnology and renewable energy. Japan is the world’s second producer of cars and ships. The industrial sector contributes to nearly 30% of the GNP.
The service sector accounts for more than 70% of the GDP and employs nearly 70% of the active population.

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 3.7 25.3 69.7
Value Added (in % of GDP) 1.2 25.6 73.2
Value Added (Annual % Change) 0.3 -1.6 2.2

Source: World Bank - Last Available Data.

 
 
 
Monetary Indicators 20092010201120122013
Japanese Yen (JPY) - Average Annual Exchange Rate For 1 USD 93.5787.7879.8179.7997.60

Source: World Bank - Last Available Data.

 
 

Learn more about Market Analyses about Japan on Globaltrade.net, the Directory for International Trade Service Providers.

Indicator of Economic Freedom

Definition:

The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

Score:
72.4/100
Position:
Mostly Free
World Rank:
25/178
Regional Rank:
6/25

Distribution of Economic freedom in the world
Source: 2014 Index of Economic freedom, Heritage Foundation

 

Business environment ranking

Definition:

The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.

Score:
7.33
World Rank:
27/82

Source: The Economist - Business Environment Rankings 2014-2018

 

Country Risk

See the country risk analysis provided by Coface.

 

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Foreign Trade in Figures

Foreign trade is an essential element of the Japanese economy, but the country is not sufficiently open and imposes extensive non-tariff barriers, especially in the agricultural sector. The country is currently negotiating a number of free-trade agreements, including with the EU and the Transpacific partnership. Japan ranks fourth as a global importer and exporter of goods (2012) and trade represents around 30% of the Japanese GDP.

Japan's trade balance has been negative since 2011: exports dropped as a result of the global slowdown and the proven risks of contamination of the food chain following the Japanese nuclear disaster. Meanwhile, imports have increased due to purchases related to energy production and their cost has risen due to the weak yen. In 2013, the deficit reached a record level of $112b, a 65% increase compared to 2012.

The main trade partners of Japan are the United States, China, Southeast Asia and Saudi Arabia.

 
Foreign Trade Indicators 20092010201120122013
Imports of Goods (million USD) 551,981694,059855,380885,843833,166
Exports of Goods (million USD) 580,719769,839823,184798,568715,097
Imports of Services (million USD) 146,965155,613165,727174,924160,941
Exports of Services (million USD) 125,918138,703142,551142,489143,890
Imports of Goods and Services (Annual % Change) -15.711.15.95.33.1
Exports of Goods and Services (Annual % Change) -24.224.4-0.4-0.21.5
Imports of Goods and Services (in % of GDP) 12.314.016.016.719.0
Exports of Goods and Services (in % of GDP) 12.715.215.114.716.2
Trade Balance (million USD) 58,092108,524-4,474-53,484-89,648
Trade Balance (Including Service) (million USD) 23,25274,859-42,905-103,986-125,128
Foreign Trade (in % of GDP) 25.029.131.231.335.1

Source: WTO - World Trade Organization ; World Bank , Last Available Data

 

Main Partner Countries

Main Customers
(% of Exports)
2014
United States 19.0%
China 18.3%
South Korea 7.4%
Hong Kong 5.5%
Thailand 4.5%
See More Countries 45.3%
Main Suppliers
(% of Imports)
2014
China 22.1%
United States 9.0%
Australia 5.9%
Saudi Arabia 5.8%
United Arab Emirates 5.1%
See More Countries 52.2%

Source: Comtrade, Last Available Data

 
 

Main Products

- bn USD of products exported in 2014
Motor cars and other motor vehicles principally...Motor cars and other motor vehicles principally designed for the transport of persons, incl. station wagons and racing cars (excl. motor vehicles of heading 8702) 13.0%
Parts and accessories for tractors, motor vehicles...Parts and accessories for tractors, motor vehicles for the transport of ten or more persons, motor cars and other motor vehicles principally designed for the transport of persons, motor vehicles for the transport of goods and special purpose motor vehicles of heading 8701 to 8705, n.e.s. 4.8%
Electronic integrated circuits and microassembliesElectronic integrated circuits and microassemblies 3.7%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 2.0%
Cruise ships, excursion boats, ferry-boats, cargo...Cruise ships, excursion boats, ferry-boats, cargo ships, barges and similar vessels for the transport of persons or goods 1.8%
See More Products 74.8%
- bn USD of products imported in 2014
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals, crude 15.9%
Petroleum gas and other gaseous hydrocarbonsPetroleum gas and other gaseous hydrocarbons 10.3%
Petroleum oils and oils obtained from bituminous...Petroleum oils and oils obtained from bituminous minerals (excl. crude); preparations containing >= 70% by weight of petroleum oils or of oils obtained from bituminous minerals, these oils being the basic constituents of the preparations, n.e.s.; waste oils containing mainly petroleum or bituminous minerals 3.0%
Automatic data processing machines and units...Automatic data processing machines and units thereof; magnetic or optical readers, machines for transcribing data onto data media in coded form and machines for processing such data, n.e.s. 2.4%
Coal; briquettes, ovoids and similar solid fuels...Coal; briquettes, ovoids and similar solid fuels manufactured from coal 2.4%
See More Products 66.0%

Source: Comtrade, Last Available Data

 
See More Products
More imports (Intracen Data)
More exports (Intracen Data)
 
 
 

Main Services

- bn USD of services exported in 2011
31.18%
26.33%
19.97%
7.54%
7.53%
2.83%
2.03%
1.14%
0.82%
0.52%
0.11%
- bn USD of services imported in 2011
29.51%
27.38%
16.24%
11.43%
4.60%
4.06%
2.52%
2.00%
1.11%
0.58%
0.58%

Source: Comtrade, Last Available Data

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Sources of General Economic Information

Ministries
Ministry of the Economy, Trade and Industry
Ministry of Agriculture, Forestry and Fisheries
Japan’s SME policies
Statistical Office
The Japanese Institute of Statistics
Central Bank
The Bank of Japan
Stock Exchange
Tokyo Stock Exchange
Nagoya Stock Exchange
Osaka Securities Exchange
Fukuoka Stock Exchange
Jasdaq Securities Exchange
Search Engines
Alcarna
Books.or.jp
Excite Japan
Fresh Eye
Goo
Infoseek Japan
Lisa
Lycos Japan
Bing
NTT
Straight Flash
Yahoo! Japan
Economic Portals
Economy watch

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Political Outline

Executive Power
The head of state is the Emperor. His role is largely ceremonial. The leader of the majority party or leader of the majority coalition in the parliament (House of Representatives) is designated as the Prime Minister for a four-year term. The Prime Minister is the head of the government and enjoys the real executive powers which include implementation of the law in the country and running the day-to-day affairs. The Cabinet is appointed by the Prime Minister.
Legislative Power
The legislature in Japan is bicameral. The parliament called National Diet consists of: House of Councilors (the upper house) having 242 members elected through a popular vote for six year terms; and House of Representatives (the lower house) having 480 members elected through a popular vote for four-year terms. The Constitution of Japan states that the nation's "highest organ of state power" is the National Diet. The executive branch of government is directly or indirectly dependent on the support of the National Diet, often expressed through a vote of confidence.
Main Political Parties
Conservatives, right-wing: LDP (Liberal Democratic Party) - made up of various conservative and reformist factions, the largest political party in Japan; DPJ (Democratic Party of Japan) – a liberal, social-democratic party; New Komeito – a conservative, theocratic Buddhist party.
Moderates, left-wing: - JCP (Japanese Communist Party) - a moderate communist party; SDP (Social Democratic Party) - a moderate social-democratic and populist party.
Current Political Leaders
Emperor: AKIHITO (since 7 January 1989) – hereditary
Prime Minister: Shinzō Abe (Liberal Democratic Party), since 26 December 2012.
Next Election Dates
House of Councilors: July 2016
 

Indicator of Freedom of the Press

Definition:

The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:
59/180
Evolution:
6 places down compared to 2013

Source: Worldwide Press Freedom Index 2014, Reporters Without Borders

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Map of freedom 2014
Source: Freedom House

 

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Last Updates: October 2014