Improved life expectancy and a declining birth rate mean Japan faces a labour shortage ©Getty Images
Improved life expectancy and a declining birth rate mean Japan faces a labour shortage ©Getty Images

Country spotlight: Japan

21 June 2019





The helicopter view

Japan is made up of 6,852 islands. The capital, Tokyo, is one of the world’s most populous cities.

Economic outlook

The Japanese economy ranks third in terms of nominal GDP, behind the US and China. It is forecast to come in at US$5.2tn in 2019, according to Focus Economics. But it has fallen into recession four times since 2008, mainly due to the crash in the 1990s, and reforms are crucial.

Biggest investors

Japan’s top trading partners are China, the US, South Korea and Taiwan. Just over half (58.5%) of exports by value are to Asian countries. 

Supply chain issues

Japan has few natural resources and after the shutdown of nuclear reactors following the earthquake in 2011, its industrial sector has become dependent on imported fossil fuels. The US pulled out of the Trans-Pacific Partnership in 2017, but Japan has agreed a new partnership with the EU.


Japan has the largest electronics goods industry in the world. According to the FM Global Resilience Index, its supply chain industry lies only behind Switzerland and Austria in terms of preparedness for disaster. Tokyo is due to host the Summer Olympics in 2020, a target date for many reforms.


Government debt relative to GDP is the highest ever recorded by the OECD, due to social welfare spending and an ageing society. This combined with a shrinking birth rate is causing labour shortages.  

Bottom line

Japan is often ranked among the world’s most innovative countries but it faces challenges and, in a conservative society, is considered to be behind countries such as the US and UK in supply chain advancements.

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