Japan flag Japan: Economic outline

Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Japan, the world's third-largest economy, is highly exposed to external impacts due to its heavy reliance on exports. This vulnerability has manifested itself in recent years, as its economy has experienced periods of recession alongside the global economic slowdown. Likewise, the global economic crisis caused by the Covid-19 pandemic has had a significant impact; however, the country’s economy rebounded in 2021, with an estimated growth of 2.6% (IMF), on the back of strong exports and public consumption and investment. The IMF forecast a GDP increase of 3.2% this year (underpinned by the entry into force of the Regional Comprehensive Economic Partnership trade agreement) followed by 1.4% in 2023, although uncertainty remains due to the surge in global Covid-19 cases. Private consumption growth will remain subdued given sluggish wages.

Japan has the highest debt-to-GDP ratio in the world: estimated at 256.9% in 2021, it is expected to follow a downward trend over the forecast horizon (252.3% in 2022 and 250.8% in 2023 according to the IMF). Public finances have been affected by the measures taken to contain the Covid-19-induced crisis (about 16% of GDP in 2020-2021), which included the Employment Adjustment Subsidy, cash benefits to SMEs and concessional loans. As a result, the general government deficit stood at 8% in 2021 (down from a record level of 9.2% one year earlier). By the end of 2021, Kishida’s cabinet approved a larger-than-expected JPY 55.7 trillion fiscal stimulus package that includes more funding for universities and digitalization of rural areas, as well as financing to raise semiconductor manufacturing capacity, aimed at improving the country’s economic security. As the economy rebounds and the global situation normalizes, the IMF projects a deficit of 3.6% this year followed by a further decrease in 2023 (2%). Inflation was negative by 0.2% last year; nevertheless, inflationary pressures are building relatively quickly and the IMF expects the inflation rate to turn positive in 2022 (0.5%) before picking up to 0.7% in 2023.

Moving forward, budgetary consolidation will remain a key issue for the country as it tries to bring its debt levels under control. The demographic troubles faced by Japan are getting more serious. An ageing society causes a big challenge for the country, as the government’s expected spending on pensions and health care is set to keep on rising. Additionally, a declining birthrate leads to a significant decrease in the population, and as a result a decrease in the number of taxpayers. Japan’s working-age population has been declining for a few decades, but that has been offset by rising participation, helping in employment growth and maintaining a low unemployment rate. Elevated debt levels on business balance sheets could restrain employers’ ability to hire more and offer stronger wage gains. Unemployment was stable at 2.8% in 2021 but is expected to decrease marginally to 2.4% this year and 2.3% in 2023.

Main Indicators 202020212022 (e)2023 (e)2024 (e)
GDP (billions USD) 5.004.00e4.004.004.00
GDP (Constant Prices, Annual % Change) -4.61.7e1.71.61.3
GDP per Capita (USD) 39e39e343536
General Government Balance (in % of GDP) -8.2-6.3e-7.3-3.2-2.3
General Government Gross Debt (in % of GDP) 259.4262.5e263.9261.1260.3
Inflation Rate (%) -0.0-
Unemployment Rate (% of the Labour Force)
Current Account (billions USD) 146.94142.1958.1194.39131.85
Current Account (in % of GDP)

Source: IMF – World Economic Outlook Database, 2016

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
Japanese Yen (JPY) - Average Annual Exchange Rate For 1 GBP 146.89144.36147.32136.25136.89

Source: World Bank, 2015


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Latest Update: January 2023

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