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The Economy of Japan

Japanese Economy

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Economy - overview: In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan advance with extraordinary speed to the rank of second most technologically powerful economy in the world after the US. Today, measured on a purchasing power parity (PPP) basis, Japan is the third-largest economy in the world after the US and China. Two notable characteristic of the post-war economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features are now eroding under the dual pressures of global competition and domestic demographic change. Japan's industrial sector is heavily dependent on imported raw materials and fuels. A tiny agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Usually self sufficient in rice, Japan imports about 60% of its food on a caloric basis. Japan maintains one of the world's largest fishing fleets and accounts for nearly 15% of the global catch. For three decades, overall real economic growth had been spectacular - a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the after effects of inefficient investment and an asset price bubble in the late 1980s that required a protracted period of time for firms to reduce excess debt, capital, and labor. In October 2007 Japan's longest post-war period of economic expansion ended after 69 months and Japan entered into recession in 2008, with 2009 marking a return to near 0% interest rates. The 10-year privatization of Japan Post, which has functioned not only as the national postal delivery system but also, through its banking and insurance facilities as Japan's largest financial institution, was completed in October 2007, marking a major milestone in the process of structural reform. The Japanese financial sector was not heavily exposed to sub-prime mortgages or their derivative instruments and weathered the initial effect of the global credit crunch, but a sharp downturn in business investment and global demand for Japan's exports in late 2008 pushed Japan further into a recession. Japan's huge government debt, which totals 170% of GDP, and the aging of the population are two major long-run problems. Debate continues on the role of and effects of reform in restructuring the economy.

GDP:

GDP - real growth rate: -0.4% (2008 est.) 2.4% (2007 est.) 2% (2006 est.)

GDP - per capita:

GDP - composition by sector: agriculture: 1.4% industry: 26.4% services: 72.1% (2008 est.)

Population below poverty line:

Household income or consumption by percentage share: lowest 10%: 4.8% highest 10%: 21.7% (1993)

Distribution of family income - Gini index: 38.1 (2002)

Inflation rate (consumer prices):

Labor force: 66.15 million (2008 est.)

Labor force - by occupation: agriculture: 4.4% industry: 27.9% services: 66.4% (2005)

Unemployment rate: 4.2% (2008 est.)

Budget: revenues: $1.672 trillion expenditures: $1.823 trillion (2008 est.)

Industries: among world's largest and technologically advanced producers of motor vehicles, electronic equipment, machine tools, steel and nonferrous metals, ships, chemicals, textiles, processed foods

Industrial production growth rate: 0.5% (2008 est.)

Electricity - production: 1.195 trillion kWh (2007 est.)

Electricity - production by source:

Electricity - consumption: 1.08 trillion kWh (2006 est.)

Electricity - exports: 0 kWh (2007 est.)

Electricity - imports: 0 kWh (2007 est.)

Oil - production: 132,400 bbl/day (2007)

Oil - consumption: 5.007 million bbl/day (2007)

Oil - exports: 240,000 bbl/day (2007)

Oil - imports: 5.032 million bbl/day (2007)

Oil - proved reserves: 44.12 million bbl (1 January 2008 est.)

Natural gas - production: 3.729 billion cu m (2007 est.)

Natural gas - consumption: 100.3 billion cu m (2007 est.)

Natural gas - exports: 0 cu m (2007 est.)

Natural gas - imports: 95.62 billion cu m (2007 est.)

Natural gas - proved reserves: 20.9 billion cu m (1 January 2008 est.)

Agriculture - products: rice, sugar beets, vegetables, fruit; pork, poultry, dairy products, eggs; fish

Exports: $776.8 billion f.o.b. (2008 est.)

Exports - commodities: transport equipment, motor vehicles, semiconductors, electrical machinery, chemicals

Exports - partners: US 20.4%, China 15.3%, South Korea 7.6%, Taiwan 6.3%, Hong Kong 5.4% (2007)

Imports: $696.2 billion f.o.b. (2008 est.)

Imports - commodities: machinery and equipment, fuels, foodstuffs, chemicals, textiles, raw materials

Imports - partners: China 20.5%, US 11.6%, Saudi Arabia 5.7%, UAE 5.2%, Australia 5%, South Korea 4.4%, Indonesia 4.2% (2007)

Debt - external: $1.492 trillion (30 June 2007)

Economic aid - recipient:

Currency:

Currency code:

Exchange rates: yen (JPY) per US dollar - 103.58 (2008 est.), 117.99 (2007), 116.18 (2006), 110.22 (2005), 108.19 (2004)

Fiscal year: