Japan Economic Conditions

Until the global crisis of 2008-09, Japan was the second economy in the world in terms of GDP and, despite being overtaken by China in 2010, it still remains one of the first countries in the ranking of GDP per capita with equal powers. ‘purchase (PPA), with $ 37,683 (2014). After 2009, the Japanese economy proceeded in a fluctuating way: + 5% in 2010 was denied by −1% in 2011, followed by + 2% in 2012 and + 0.3% in 2013. To favor the relaunch, Shinzō Abe’s government has adopted a macroeconomic approach (defined by the media as Abenomics), which represents a reversal of the trend compared to previous economic policies. In essence, the prime minister has promoted a strong injection of liquidity through a vast public works plan (in particular with the construction of new infrastructures), capable of inducing growth in the short to medium term. He also favored the weakening of the national currency, the yen, against the dollar, a measure that led to a lowering of the deflationary curve, which had already affected the archipelago for five years, and caused inflation to rise sufficiently. to stimulate exports. However, the trade deficit increased by 65.3% (2013), due to the substantial imports of hydrocarbons, now necessary to integrate the production of the nuclear power plant after the Fukushima accident (see below). At the same time, for the first time since 1997, the unemployment rate fell (stabilized at 3.7% in 2014) and the country has thus reached almost full employment. Among the objectives of the Abe government there is also an expansion of welfare for families, destined to increase female participation in the labor market (low compared to other developed countries). The latter, moreover, is experiencing a moment of transition and is today aimed at a greater diffusion of flexibility and part-time employment.

To revive the Japanese economy, however, other structural reforms must also be addressed, in particular regarding the level of public debt, which is the highest in the world (245% of GDP in 2013, it amounted to 170% in 2005 and 50% in 1991) and weighs on the state budget for the payment of accumulated interest expense. Currently over 90% of the debt is borne by the Japanese, at low rates, and no one has an interest in that financial system collapsing. But national savings have limits and there is no certainty that Japan can continue to finance itself locally. In the event of an evolution of the debt structure, such as, for example, the recourse to foreign markets, the stable and low-cost financing capacity of Japan could be questioned.

According to thenailmythology, the country’s workforce is distributed for 3.9% in agriculture, 26.3% in industry and 69.8% in services (2010), sectors that contribute to the formation of GDP respectively for 1, 1%, 25.5% and 73.4% (2013). The cultivated area, already very limited, has progressively decreased, so that, despite the use of advanced agronomic techniques, the agricultural sector is unable to meet internal needs and Japan is forced to import foodstuffs. The main crop is rice (10.6 million t in 2012), which occupies more than half of the arable land, followed by wheat, soy, potato, sweet potato, sugar beet. The production of citrus fruits, cereals, legumes, vegetables, timber is also important (68.6% of the territory is occupied by forests), as well as that linked to the breeding of cattle, pigs and silkworms. In the fish sector, the country ranks among the first in the world for the quantity of fish landed (4,756,040 t in 2011); although an international moratorium on whaling is in force, Japan continues to practice it, using the pretext of scientific purposes.

As for the secondary sector, the country, poor in mineral resources, is totally dependent on imports of raw materials and especially oil. To reduce the strong dependence on energy from abroad, the Japan has over time upgraded the nuclear power plant, which now has 50 power plants, in addition to another 2 under construction. Following the earthquake (magnitude 9 on the Richter scale) that hit the country on 11 March 2011 and the consequent tsunami that hit the coasts of the Tōhoku region, some nuclear power plants were dangerously damaged: 14 reactors shut down thanks to the control bars, but the security process, which should have cooled them, was compromised by the tsunami, causing explosions and leakage of radioactive material, in particular at the Fukushima power plant. which continues to release radioactivity into the environment. Following the catastrophe, many Japanese, aware of the dangers of poor plant management and poor supervision by energy producers, created a movement of opinion in favor of closing the reactors. However, the government is determined not to give up the only source of energy produced domestically, which avoids complete dependence on abroad and isolates the country from international tensions.

The manufacturing industry exports high-tech finished products (17.5% of the total export of manufactured goods in 2011) and is structured in financial-industrial complexes that also deal with the marketing of the product and make use of the collaboration of many small companies handcrafted. Of particular importance is the mechanical and means of transport sector, which is efficient in all its sectors. In particular, the automotive industry, which in 2013 produced 8,189,323 cars and 1,440,747 commercial vehicles, has established itself worldwide and boasts numerous production and assembly plants also in other East Asian countries, in Latin America., in the United States and Europe. Significant dimensions have also reached the steel, metallurgical and chemical industries.

One of the greatest strengths of Japan resides in the revenues deriving from foreign investments and in the ability to remain constantly at the top of technology, thanks to the strategic priority that the country attributes to the search for dollars in favor of these two sectors (3.4% of GDP). Furthermore, the bet won by Tōkyō, where it was officially decided that the XXXII Olympic Games, 2020 edition, will be held, will create new opportunities to attract investments and give confidence to consumption.

Trade, already damaged by the 2008-09 depression and the 2011 earthquake, has only recently shown signs of recovery. In 2012, the main export partners were China (18.1%), the United States (17.8%), the Republic of Korea (7.7%) and Thailand (5.5%); for imports, China is always in first place (21.3%), followed, but at a distance, by the United States (8.8%), Australia (6.4%) and Saudi Arabia (6,2%).

The Japanese government is committed to concluding free trade agreements with the European Union and to maintaining those already existing under the Trans Pacific partnership (TPP), a proposed trade agreement between the United States and the 11 Pacific countries. The latter, at the moment, are in a stalemate due to the reluctance of Japan to accept all the US requests for the elimination of tariffs in the agricultural field. Prime Minister Abe has promised a reform of this sector by moving from the traditional system of subsidies and duties to promoting exports.

Japan Economic Conditions