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Japan: Overview
Last modified on 24 May 2010 at 14:01
Having suffered one of the largest falls in GDP among the world's developed economies during 2009, Japan's economy is benefiting from an export-led recovery supported strong growth in demand elsewhere in Asia. Growth of about 2% is expected in 2010.
Japan’s economy experienced an uneven recovery last year, but in the last quarter of 2009 and the first quarter of 2010 it saw sustained growth. The recovery has been led by a sharp increase in net exports, which accounted for more than half of the GDP growth seen in the first quarter. Imports have increased, but by a much smaller amount than exports. Domestic demand increased only modestly, even given the fiscal stimulus, and consumer prices have begun to fall again.
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The strong recovery in demand elsewhere in Asia will continue to support GDP growth in Japan in the short term, and we expect GDP growth of around 2% in each of 2010 and 2011. With no room left for further fiscal stimulus, given the scale of public debt, and with monetary policy rendered ineffective by falling consumer prices, much depends on a return to confidence among households and business and the associated boost to household and investment spending.