Economic trends
After a growth rate of 2.4% in 2005, the GDP has had a slightly lower growth: 2% in 2006 and 2.4% in 2007. The country went into recession in 2008, mainly because of a decline of economic activity in the United States (main trading partner), in Europe (which accounts for 15% of the country's total of exports) and in Asia (more specifically China). Moreover, the rise of energy and food prices has contributed to the fall of domestic demand.
With the current account slightly in surplus, trade continues to sustain the economy and imports are benefiting from the appreciation of the Yen.
The general government balance has a huge deficit, and the level of the public net-debt is quite significant. They account for 3.7% and nearly 200% of the GDP respectively. It is for these reasons that the government announced restrictions on budgetary and monetary policies. Unemployment decreased until 2007. Since 2008 this rate is increasing and this trend will continue in the next years.
Main branches of industry
Japan has few natural resources, but deposits of gold, magnesium, coal, and silver meet Japan’s current industrial needs. Fishery is also a very important economic activity. Only 15% of Japan's land is suitable for cultivation. Tea and rice are the two main crops. The agricultural economy is highly subsidized and protected. Agriculture contributes marginally to the GDP and employs less than 5% of the active population.
The industrial sector is very diversified. Japanese firms produce basic products (steel, paper), as well as advanced technological goods. Japan is the world’s second producer of cars and ships. The industrial sector contributes nearly 30% to the GDP. Some sectors such as automobiles, robotics, and micro-technology are very competitive.
The service sector accounts for nearly two thirds of the GDP.
International trade
Foreign trade is an essential element of the Japanese economy. Under the pressure exerted by the different members of the WTO, the Japanese market has progressively opened up to international exchanges since the 1994 Uruguay Round. Nevertheless, the World Trade Organization recommends a further liberalization of exchange, especially in the agricultural sector. Paradoxically, the Japanese commercial policy is associated with some of the lowest customs duties in the world and extensive non-tariff barriers. Consequently a free-trade agreement was signed in February, 2009 with Switzerland (first European country to conclude such an agreement with Japan) which exempts 99 % of trade transactions of custom duty between these two countries during a period of 10 years. Its main commercial partners are the United States, China and Southeast Asia. In 2008, Japan showed a big trade surplus and should probably maintain a positive balance of trade during the next years.
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