Faster than expected growth
The economy recovered from a pause in the latter half of 2004 with strong growth in the first half of 2005, despite a number of headwinds. The expansion is led by private domestic demand, underpinned by strong corporate profits and a reversal of the declining trend in employment and wages.
A number of indicators suggest that the economy has finally completed the post-bubble adjustment, allowing output to grow at a rate of around 2% in 2006-07.The Bank of Japan's policy of quantitative easing should continue until inflation is high enough to make the risk of renewed deflation negligible. The government should accelerate the pace of fiscal consolidation given the faster than expected GDP growth. A broad structural reform programme is needed to boost potential growth in the context of rapid population ageing. While the enactment of the Japan Post privatisation bills is a welcome step, effective and rapid implementation of the bills is needed to realise the economic benefits of this reform.
Population (000s), 2004127 687
Area (000 sq km)378
GDP (Billion USD), 20044 666.4
Life expectancy at birth (Women, Men), 2003 85.3, 78.4
Total labour force (000s), 200466 420
Government typeConstitutional Monarchy
Indicators% change unless otherwise indicated
GDP growth2.42.02.0
Household savings ratio6.76.56.5
Consumer price index-
Short-term interest rate (%)
Unemployment rate (%)
General government financial balance (% GDP)-6.5-6.0-6.0
Current account balance (% GDP)
Source: OECD© OECD Observer, No. 252/253, November 2005

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.2% Aug 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.4% Aug 2020
Last update: 13 Oct 2020

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