Japan Real Gross Domestic Product

Gross domestic product in Japan expanded by 3% QOQ in the October-December quarter.

Published quarterly by the Cabinet Office. Updated till the quarter of October-December 2020 (First Preliminary estimate published on December 8th, 2020).

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 inputted rents for owner-occupied dwellings.  However, it generally does not include unpaid activities such as volunteer and unpaid housework.

The Cabinet Office releases the first preliminary two months after quarter end. It then releases the second preliminary three months after quarter end. The final estimates are published in December of the following year.

Japan’s GDP was 553.7 trillion yen in 2019. Using the average USD/JPY rate of 109.0 for 2019, it translates into 5.08 trillion USD, placing Japan as the third largest economy after the U.S. (21.43 trillion USD) and China (14.34 trillion USD).  Germany was the 4th largest with a GDP of 3.85 trillion USD.  Looking at the GDP components in Japan, private consumption accounts for 55.2% of its GDP, followed by government consumption (20.0%) and private non-residential investment (16.0%).  Exports and imports account for 17.5% and 17.3% respectively.

Historically, the export and import ratios to its GDP changed through the times. Between 1980-1985, the average export ratio to GDP was 14.2%.  Japan’s export increased rapidly due to the US economic boom in the early 1980s.  As the import from US did not increase much, Japan’s trade surplus against the US became significantly larger.  This worsened the trade friction between Japan and the US.  Between the years of 1980-1985, the average of USD/JPY rate was at 235.0, which was ultimately in favor of Japan’s exports.  In 1985, G5 agreed on the foreign exchange intervention to make the US dollar weaker (which was called Plaza Accord).  After the intervention to make the US dollar weaker, Japanese Yen got significantly stronger.  As Japanese Yen got stronger, the export ratio of its GDP decreased. Between 1986-1999, the export ratio of Japan remained relatively flat at an average of 9.9%.

After the early 1990s, and up until 2019, Japan’s outward foreign direct investment grew in an upward trend, meaning Japanese companies have been making goods in the factories outside of Japan.  In the past couple of decades, since Japan was included in the global supply chain, exports and imports expanded resulting in these shares of GDP ultimately growing since 2000s.  While both exports and imports have increased, Japan has been producing a trade deficit since 2011. In 2016 and 2017, Japan produced a trade surplus, however these were not as large as in past recorded history.

For many years, since 1998, Japan experienced a weak economic growth compared to its potential GDP. This was due to the deflationary pressure. Between 1998-2013, the average GDP deflator was -1.06%, meaning Japan has struggled with deflationary pressure during the period.  However, with the combination of the fiscal and monetary policy easing, so called “Abenomics”, the GDP deflator became positive between 2014-2016.  As a direct result from this, Japan was on the course of overcoming the deflation.  However, in recent years inflationary pressure has been weak, and as a direct result of the recession in 2020, there is a possibility of experiencing yet another deflationary pressure. 

For more information, visit the official government page

Real GDP-Annual data

Source: Cabinet Office, JMA.

The Next Release Date:Second Preliminary estimate for Oct-Dec 2020: March 9th, 2021.   

                                   First Preliminary estimate for Jan-March 2021: May 18,2021.















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