Japan Gross Domestic Product

The Japanese economy grew by 0.5% QoQ in the January-March 2017 quarter, accelerating from the 0.3% growth in the previous quarter.

Published quarterly by the Cabinet Office. Updated till the quarter of Jan-March 2017 (First Preliminary estimate published on May 18th, 2017).

Recent data trend

According to the Cabinet Office, Japan's Real GDP grew by 0.5% quarter on quarter (QoQ) in the first quarter of 2017. This marked the expansion in the economy for the fifth straight quarter, a remarkable growth streak that had not happened since 2006 . On annualized terms, real gdp grew by 2.2% as per the preliminary estimate, well higher than Japan's potential annual growth rate considered to lay between 0 to 0.5%.

Japan's growth in the first quarter of 2017 was also well-balanced, supported by both domestic demand and by export demand. Private consumption rose by 0.4% QoQ after coming in flat in the previous quarter. Residential investments and non-residential capital investment also recorded positive growth, although their contribution to the overall growth was negligible. Exports grew by 2.1% QoQ, helped by renewed strength in exports to China and a weak yen.

The high growth in the quarter is encouraging. According to the BoJ's estimate, the output gap, the difference between the potential growth and the actual output was a positive 0.6% as of the last quarter of 2016. The high growth in the first quarter of 2017 will further push up the output gap, potentially helping to form an inflationary pressure within the Japanese economy. BoJ Governor Kuroda often point to output gap as the most critical indicator to watch.

On the other hand, it is important to note that there is a considerable lag between the rise in the output gap and inflation. In 1989, the output gap had to rise to 2% and stay there for more than a year before the domestic deflator started rising. If the same lag applies to the contemporary Japan, the Japanese economy needs to maintain the pace of 2% annual growth for another 2 years before we start to see a rise in inflation. While the 5 quarters growth streak in the Japanese economy gives fresh hopes for Japan to achieve its reflation goal, Japan is only half way on the road to reflation and a policy mistakes could easily derail Japan from this path. 

Brief overview of "GDP"

Gross Domestic Product (GDP) measures the market value of economic activities within a country, in our case, Japan. It includes some non-market services such as government services and imputed rents for owner-occupied dwellings, but it generally does not include unpaid activities such as volunteer and unpaid housework.     

Japan’s GDP was 475.7 trillion yen in 2012. Using the average USD/JPY rate of 79.8 for 2012, it translates into 5.96 trillion USD, placing Japan as the third largest economy after U.S. (15.68 trillion USD) and China (8.22 trillion USD). Germany was the 4th largest with a GDP of 3.4 trillion USD. In Japan, private consumption accounts for 60.9% of its GDP, followed by government consumption (20.5%) and private non-residential investment (13.4%). Exports and imports account for 14.7% and 16.6% respectively.

Japan’s GDP has been on a declining trend since 1997 when it was 523.5 trillion yen. The decline is due to low real growth (0.6% per year on average between 1997-2012) and outright deflation (-1.2% per year on average between 1997-2012).

For more information, visit the official government page

Nominal GDP

Real GDP-Annual data

Nominal GDP-Annual data

Source: Cabinet Office, JMA.

Source: Cabinet Office, JMA.

The Next Release Date: Second Preliminary estimate for Jan-Mar 2017: June 8th, 2017.

                                             First Preliminary estimate for Apr-June 2017: August 14th, 2017.

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