Japan » Introduction

Basic Economic Facts

GDP Composition by Sector

Japan is a major economic global power. Government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defence allocation have helped Japan advance with extraordinary speed to become one of the largest economies in the world.

For three decades, overall real economic growth had been spectacular: a 10% average in the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s. Growth slowed markedly in the 1990s largely due to the after-effects of over-investment during the late 1980s and domestic policies intended to wring speculative excesses from the stock and real estate markets.

The economy saw signs of strong recovery in 2005. GDP growth for the year 2005 was 2.8%, with an annualised fourth quarter expansion of 5.5%, surpassing the growth rate of the US and European Union during the same period. Unlike previous recovery trends, domestic consumption has been the dominant factor in leading the growth. Hence, the Japanese government predicts that recovery will continue in 2006.