Japan Nominal GDP

Reflation no more?

Published quarterly by the Cabinet Office. Updated till the quarter of July-September 2019 (Second Preliminary estimate published on December 9th, 2019).

Recent data trend

It is not quite deflation yet, but the hope of a reflation seems to be diminishing with every passing moment. The deflator for domestic demand in Japan fell by 0.1% quarter on quarter in the January-March quarter of 2019. The deflator was showing a consistent rise in 2017, but the erratic behavior of the deflator in the past 4 quarters suggest that a reflationary pressure, assuming there was one in 2017, is diminishing.

One noticeable reason is the deflationary pressure emanating from export prices. Export deflator turned negative year-on-year for the first time in 8 quarters. However, even among domestic demand components, we see a deceleration. The deflator for private consumption barely rose in the January-March quarter. While it is not quite deflation yet, but recent changes suggest that the once the economy comes under deflationary pressure, it won't take much time before the Japanese economy succumbs to the pressure.

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).

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Nominal GDP-Annual data

Source: Cabinet Office, JMA.

Next release date:   First Preliminary estimate for October-December 2019: February 17th, 2020.

                              Second Preliminary estimate for October-December 2019: March 9th, 2020.