Assignment on Economics and GDP 2022

Running head: ECONOMICS
Economic Performance of Japan: 2006 - 2016
Name of the Student:
Name of the University:
Author note:

ECONOMICS
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1.0 Introduction
Japan is a highly developed economy of Asia as well as in the world. The
economy of Japan is a free market economy, which is 3rd biggest in the world in nominal
GDP and 4rth largest in purchasing power parity (PPP). It is also the 2nd biggest among
the most developed economies of the world (Felbermayr et al., 2017). In 2016, the
country’s GDP was 4.93 trillion a current USD, with GDP per capita being 38794.33 at
current USD (World Bank, 2019). Japan is a nation with most innovative techniques in
all types of application in personal and professional life of individuals. It has the largest
industry in electronic goods and filling of patents. Moreover, Japan holds the 3rd rank
among the biggest automobile manufacturing countries (Sawe, 2019). It is also the
largest creditor of the world with leading public debt ratio. Top 5 products and/or
services produced by the economy are automobiles, electronic goods, semiconductors,
petrochemicals and iron and steel products. The biggest industries of the Japanese
economy are manufacturing, agriculture, fishing and tourism. The service sector
contributes the maximum amount in the GDP with 71.4%, followed by the industry
sector with 27.5% and agriculture with 1.2% (Sawe, 2019). The rate of unemployment is
2.9%. As of 2018, Japan is 4th biggest exporter with exports worth of $728 billion and 4th
biggest importer with imports worth of $632 billion in the global economy. The top 5
export markets of Japan are USA (20%), China (17.55%), South Korea (7.1%), Hong
Kong (5.6%) and Thailand (4.5%). The major exports of the country consists of
automobiles, motor parts, power generating machinery, electronic goods, iron and steel
products, plastic materials and semiconductors (Sawe, 2019). According to a report by
Phillpott (2019), the top 5 biggest organizations of Japan are Toyota Motor Corporation
(biggest car manufacturer of Japan), SoftBank Group (conglomerate with businesses in
telecommunications, finance, e-commerce, media, and technology), Mitsubishi UFJ
Financial Group (banking and finance), Nippon Telegraph and Telephone
(Telecommunication Company) and Japan Post Holdings (conglomerate with
businesses in postal service, banking, logistics and insurance). This essay will highlight
the production output performance analysis, labor market analysis and price level

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analysis of Japan along with a discussion on the government measures taken to
address the situations.
2.0 Production Output Performance Analysis
2.1 GDP
GDP or Gross Domestic Product is referred to the monetary value of the total
output produced within the geographical boundary of a nation in a given time period,
mostly a financial year (Pindyck & Rubinfeld, 2015). It is the best measure of a country’s
economic health. Japan has been experiencing high GDP for almost a decade due to
advanced technology and high level manufacturing and within 2006 and 2016, it
achieved highest GDP of 6.2 trillion USD in 2012 while in 2015, it experienced lowest
GDP of 4.39 trillion USD (World Bank, 2019).
2.2 GDP Growth Rate
GDP growth rate is the measure of the pace of movement of an economy. In
other words, the acceleration of an economy is measured by the growth rate of GDP. It
is derived by comparing the growth of the economy per quarter (Pindyck & Rubinfeld,
2015). The growth rate of GDP is dependent on the personal consumption, captured by
retail sales, business investment, especially in inventory and construction, government
spending, and the net trade amount. Japan has experienced a fluctuating GDP growth
rate between 2006 and 2016, as shown in the graph below.

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2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-6.00
-4.00
-2.00
0.00
2.00
4.00
6.00
1.42 1.65
-1.09
-5.42
4.19
-0.12
1.50 2.00
0.37
1.22 0.61
GDP Growth rate of Japan(%),
2006-2016
Figure 1: GDP growth rate of Japan (2006-2016)
(Source: World Bank, 2019)
It is observed that economy of Japan experienced a huge fall during 2008-09
when the growth rate became highly negative. During the global financial crisis, the
export of Japan shrank 26% and the consumers and businesses went for spending
cuts. Business investment fell by 10.4% and consumer expenditure fell by 1.1%. There
was wage cut also followed by increasing unemployment (McCurry, 2009). However,
the country bounced back in 2010 with a sharp increase in the GDP growth rate due to
strong capital spending. However, the growth fell again 2011 due to the massive impact
of earthquake and tsunami and after recovery in the subsequent years, it has been
experiencing a positive and moderate growth rate.
2.3 GDP Per Capita
GDP per capita represents the economic production accounting for the number
of people. The GDP of a nation is divided by the total population and that gives the GDP
per capita (Pindyck & Rubinfeld, 2015). This is the most appropriate measure for the
standard of living of the country. According to Oecdbetterlifeindex.org (2019), the GDP
per capita of Japan is quite high and thus, the standard of living is also high. Tokyo is