Panorama econòmic

Economic indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

Japan, the world's third-largest economy, is highly exposed to external impacts due to its heavy reliance on exports. This vulnerability has manifested itself in recent years, as its economy has experienced periods of recession alongside the global economic slowdown. Likewise, the global economic crisis caused by the Covid-19 pandemic has had a significant impact (-4,6% in GDP growth in 2020). However, the country’s economy rebounded in 2021 (+1.7%) and 2022 (+1,7%), and is  estimated to growth 1.6% in 2023 (IMF, October 2022), on the back of strong public consumption and investment. Japan’s economy contracted slightly in Q3 2022, due mostly to a drop in net exports, raising concern that the recovery that had just begun was coming to an end. But the strength of import growth is a sign that domestic demand remains reasonably strong.
Looking ahead, real GDP growth should return to positive territory. A full unwinding of pandemic-related restrictions has unleashed pent-up demand for consumer spending. Unfortunately, high inflation is quickly eroding household purchasing power. As pent-up demand fades and the reality of weaker inflation-adjusted wages sets in, the economy will grow only modestly in 2023 (Deloitte Insights, 2023).

Japan has the highest debt-to-GDP ratio in the world: estimated at 262.5% in 2021 and 263.9% in 2022, it is expected to stabilise over the forecast horizon (261.1% in 2023 and 260.3% in 2024 according to the IMF). Public finances have been affected by the measures taken to contain the Covid-19-induced crisis (about 16% of GDP in 2020-2021), which included the Employment Adjustment Subsidy, cash benefits to SMEs and concessional loans. As a result, the general government deficit stood at 6.3% in 2021 (down from a record level of 9.2% one year earlier) and 7.3% in 2022. By the end of 2021, Kishida’s cabinet approved a larger-than-expected JPY 55.7 trillion fiscal stimulus package that includes more funding for universities and digitalization of rural areas, as well as financing to raise semiconductor manufacturing capacity, aimed at improving the country’s economic security. As the economy rebounds and the global situation normalizes, the IMF projects a deficit of 3.2% this year followed by a further decrease in 2024 (2.3%). Inflation was negative by 0.2% in 2021; nevertheless, inflationary pressures are building relatively quickly and the inflation reached 2% in 2022. The IMF expects the inflation rate to be reduced to 1.4% in 2023 and 1% in 2024.

Moving forward, budgetary consolidation will remain a key issue for the country as it tries to bring its debt levels under control. The demographic troubles faced by Japan are getting more serious. An ageing society causes a big challenge for the country, as the government’s expected spending on pensions and health care is set to keep on rising. Additionally, a declining birthrate leads to a significant decrease in the population, and as a result a decrease in the number of taxpayers. Japan’s working-age population has been declining for a few decades, but that has been offset by rising participation, helping in employment growth and maintaining a low unemployment rate. Elevated debt levels on business balance sheets could restrain employers’ ability to hire more and offer stronger wage gains. Unemployment was stable at 2.8% in 2021 but is expected to decrease marginally to 2.4% in 2023 and 2024.

In 2023, the country’s most immediate challenge will be to navigate the volatile international context, facing steep challenges against a backdrop of the persistent health and economic overhang of a global pandemic and a war in Europe, a cost-of-living crisis caused by persistent and broadening inflation pressures, and the slowdown in China.

Vols fer algun comentari sobre aquest contingut? Escriu-nos.