Japanese Economy

Economic Analysis of Japan

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Submitted By:Mehul Jain |

Table of Contents

Japanese economy- an introduction 4

National Income 6

Introduction 6

Contribution to GDP by different sectors 6

Factors affecting GDP 7

Exchange rate 8

Interest rate 10

Inflation rate 12

Trade – Imports and Exports 16

Unemployment Rate 18

Challenges 20

References 22

Table of Figures

Figure 1: Real GDP Growth Rate from 1956-2006 6

Figure 2: Exchange Rate of Yen and Dollar from 2006-10 8

Figure 3: Interest Rate prevalent in Japan from 2006-10 10

Figure 4: Japan’s Inflation Rate (Consumer Prices) from 2003-10 12

Figure 5: Japan Inflation Rate from 2008-10 12

Figure 6: Birth and Death Rate from 1950-2008 13

Figure 7: Population Growth from 1880-2100 13

Figure 8: Net Exports from 2007-10 15

Figure 9: Unemployment Rate from 2006-10 17

Figure 10: Liquidity Trap of Japan since 1990 19

Japanese economy- an introduction

The economy of Japan is the third largest in the world after the United States and the People's Republic of China, with a per capita GDP at $32,608 or the 23rd highest in 2009. (Source: IMF)

From 1960 to late 80’s, Japan experienced rapid economic growth. This was referred to as the Japanese post-war economic miracle. With average growth rates of 10% in the 1960s, 5% in the 1970s, and 4% in the 1980s, Japan was able to establish itself as the world's second largest economy since 1968, until supplanted by the People's Republic of China in 2010.

By the end of the Second World War, the Japanese economy was marred by shortages, high inflation and currency devaluation. However, in the years to follow the Japanese government focused on encouraging “export promotion” to reduce the large trade deficits it had incurred due to the pacific war. They developed technologically advanced industries to produce substitutes for imported goods and provided tax reliefs and funding to strengthen exports. By 1960, trade deficits were wiped...