Macroeconomics project conclusions
Economic Outlook
Labor Market
According to International Labor Organization, the total labor force in Japan in 2017 was numbered 66,427,585, a decrease from 2016 by approximately 400,000 people. As can be seen from figure 1, since 1998, there has been a downward trend in Japanese labor population.
Figure 1 Japan Labor Force, Total - International Labor Organization
On the other hand, female participation in the labor force has increased. As can be seen from figure 2, female percentage in the labor force has increased from 40.3% to 43.2% since 2000 (International Labor Organization).
Figure 2 Labor force, female (% of total labor force) - International Labor Organization
Labor participation rate for ages 15-24 in Japan is about 45% (International Labor Organization). There has been a decreasing trend from 1997 to 2012, but the rate has grew up for the past 5 years or so (International Labor Organization).
According to Statista, the seasonally adjusted unemployment rate in February 2018 in Japan is 2.5%. This is lower than the unemployment rate in US, which was 4.1% in March 2018.
The most significant issues in the Japanese labor market are the lack of labor force and the stagnancy in wages. According to the Japan Times, labor force in Japan now is the tightest for the past 43 years. According to the Health, Labor and Welfare Ministry, the ratio of job openings to job seekers in April hit a national average of 1.48. At the same time, although there is a strong demand in labor force, labor wages are stagnant (the Japan Times).
The Total Output (GDP)
According to Trading Economics and World Bank, the GDP in Japan was 4,940.16 billion US dollars in 2016, representing 7.97% of the world economy. As shown by Figure 3, Japan GDP has decreased from 2012 to 2015, and showing growth in 2016 (World Bank).
Figure 3 Japan GDP 1960-2018 – Trading Economics.com, World Bank
In 2016, agriculture sector contributed 1.2% of the total GDP, industry sector contributed 27.7% and serviced sector 71.1% (Global Finance).
Japan consumer spending increased to 300,525 JPY billion (approximately 2700 billion USD) in 4Q 2017, which increased from 298,970 billion in 3Q 2017 (Trading Economics). According to the figure below retrieved from Trading Economics, there has been an increasing trend in Japan consumer spending since 2015.
Figure 4 Japan Consumer Spending - Trading Economics
Japan government spending was 39.4% of GDP in 2015, according to Trading Economics. Average Japan percentage of government spending to GDP was 38.6% from 2005 until 2015 (Trading Economics).
The charts below illustrate the total amount and the breakout by country and sectors of foreign direct investment (FDI) in Japan.
Chart 1 Foreign Direct Investment - Santander
Chart 2 and 3 FDI INFLOWS BY COUNTRY AND INDUSTRY - Santander
Exports from Japan was JPY 7,382 billion (67 billion in USD) in March 2018 (Trading Economics). It increased 2.1% year-on-year. Imports to Japan fell 0.6 percent year-on-year, according to Trading Economics, to JPY 6,585 billion (60 billion in USD) in March 2018.
Wages in Japan has been relatively stagnant, as can be seen from the Figure below.
Figure 5 Japan Average Monthly Wages - Trading Economics
Bank lending rate in Japan has remained at 1% since July 2017(Trading Economics). In terms of interest rate, the Bank of Japan decided to remain at -0.1% interest rate, since the adoption of negative interest rate in 2016 (Trading Economics).
Major Events
Some major events in the recent years of Japan’s business cycle are as follows (Statistics Japan, Japan’s Business Cycle):
· November 2009, government of Japan announced that Japan was in moderate deflation
· March 2009, global financial crisis
· 2002, economy began to recover
· Beginning of 1990’s, stock prices fell significantly and quickly, land prices decreased. Japan was in recession due to the dependence of their economy on land
· End of 1980’s, stable economy, low unemployment rates, stock and land prices were rising, and funds went into stock markets and real estate markets
References
International Labor Organization, World Bank population estimates. (2017). Labor force, total. The World Bank, Retrieved from https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?locations=JP
International Labor Organization, World Bank population estimates. (2017). Labor force, female (% of total labor force). The World Bank, Retrieved from https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?locations=JP
International Labor Organization, World Bank population estimates. (2017). Labor force participation rate for ages 15-24, total (%) (national estimate). The World Bank, Retrieved from https://data.worldbank.org/indicator/SL.TLF.TOTL.FE.ZS?locations=JP
Statista. (2018). Japan: Unemployment rate from February 2017 to February 2018 (seasonally adjusted). Statista, Retrieved from https://www.statista.com/statistics/276787/monthly-unemployment-rate-in-japan/
Statista. (2018). Monthly unemployment rate in the United States from March 2017 to March 2018 (seasonally-adjusted). Statista, Retrieved from https://www.statista.com/statistics/273909/seasonally-adjusted-monthly-unemployment-rate-in-the-us/
The Japan Times. (2017). The tight labor market and stagnant wages. The Japan Times. Retrieved from https://www.japantimes.co.jp/opinion/2017/06/06/editorials/tight-labor-market-stagnant-wages/#.WvN584gvy70
Global Finance. (2018). Japan GDP and Economic Data. Global Finance. Retrieved from http://www.gfmag.com/global-data/country-data/japan-gdp-country-report#axzz2kmA1XTXk
Trading Economics. (2018). Japan Consumer Spending. Trading Economics. Retrieved from https://tradingeconomics.com/japan/consumer-spending
Trading Economics. (2018). Japan Government Spending. Trading Economics. Retrieved from https://tradingeconomics.com/japan/government-spending
Trading Economics. (2018). Japan Imports. Trading Economics. Retrieved from https://tradingeconomics.com/japan/exports
Trading Economics. (2018). Japan Exports. Trading Economics. Retrieved from https://tradingeconomics.com/japan/imports
Trading Economics. (2018). Japan Average Monthly Wages. Trading Economics. Retrieved from https://tradingeconomics.com/japan/wages
Trading Economics. (2018). Japan Long Term Prime Rate. Trading Economics. Retrieved from https://tradingeconomics.com/japan/bank-lending-rate
Trading Economics. (2018). Japan Interest Rate. Trading Economics. Retrieved from https://tradingeconomics.com/japan/interest-rate
Statistics Japan, (2018). Statistics japan (English). Statistics Japan. Retried from http://www.stat.go.jp/
Japan’s Business Cycle, (2018). Economic Development History. Japan. Retrieved from https://sites.google.com/site/kjcca2013/japan-s-business-cycle