Japan: Sharp plunge

The global crisis triggered a deep recession that is likely to be the most severe in Japan's post-war history. The contraction in world trade led to a sharp plunge in exports and business investment, while falling employment and wages have reduced private consumption, leading to a projected output decline of almost 7% in 2009.

Fiscal stimulus is expected to lift output growth into positive territory from the second half of 2009, although at a rate that remains below 1% through 2010.

The Bank of Japan should fight deflation through a strong commitment to implement effective quantitative measures until underlying inflation is firmly positive. The fiscal stimulus packages are helping to cushion the downturn. However, it will be important to focus on fiscal consolidation as the economy stabilises, given the large budget deficit and high public debt ratio. Reform of the tax and social insurance systems, accompanied by structural reforms, particularly in the service sector, remain priorities to improve living standards in the face of a shrinking working-age population.

Click here to see all OECD Observer articles on Japan

See also www.oecd.org/japan

You can order the latest Economic outlook at www.oecd.org/bookshop

©OECD Observer No 274, July 2009

Economic data

GDP growth: -9.8% Q2/Q1 2020 2020
Consumer price inflation: 1.3% Sep 2020 annual
Trade (G20): -17.7% exp, -16.7% imp, Q2/Q1 2020
Unemployment: 7.3% Sep 2020
Last update: 10 Nov 2020

OECD Observer Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Digital Editions

Don't miss

Most Popular Articles

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2020