JAPAN - FINAL ASSESSMENT

Comprehensive Summary
Good/bad performance

MACROECONOMICS BBABID - Paula, Lola, Alvaro, Leonie

AGENDA

Handout 1: Handout 2: Handout 3:

Good/bad Good/bad Good/bad
Performance Performance Performance
 HANDOUT 1
Overall Performance

MACROECONOMICS BBABID - Paula, Lola, Alvaro, Leonie

Handout 1 (Table 1)
One single table, showing in columns the years 2015 to 2023, and in rows the following variables: annual growth rates of real GDP, annual growth rates of real Consumption, annual
growth rates of real Investment, annual growth rates of real exports of goods and services, annual growth rates of real imports of goods and services, annual inflation rate and average
rate of unemployment for the year

2015 2016 2017 2018 2019 2020 2021 2022 2023

Annual Growth Rate of Real GDP 1,6% 0,8% 1,7% 0,6% -0,40% -4,3% 2,1% 1% 1,3%

Annual Growth Rate of real Consumption 0,3% 0,1% 0,8% 0,4% 0.00% -2,8% 1,3% 1,9% -

Annual Growth Rate of Real Investment 2,3% 1,2% 1,6% 0,6% 0,5% -3,6% -0,1% -0,9% -

Annual Growth Rate of Real Exports of Goods and Services 3,2% 1,6% 6,6% 3,8% -1,5% -11,6% 11,7% 5,1% -

Annual Growth Rate of Real Imports of Goods and Services 0,4% -1,2% 3,3% 3,8% 1% -6,8% 5,1% 8% -

Annual Inflation Rate 0,8% -0,13% 0,49% 0,97% 0,49% 0,02% -0,24% 2,52% 3,24%

Average Rate of Unemployment for the year 3,4% 3,1% 2,8% 2,5% 2,4% 2,4% 2,8% 2,6% -

Sources:
https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locations=JP
https://databank.worldbank.org/source/world-development-indicators
https://data.oecd.org/gdp/investment-gfcf.htm
https://data.worldbank.org/indicator/NE.EXP.GNFS.KD.ZG?end=2022&locations=JP&start=2015
https://data.worldbank.org/indicator/NE.IMP.GNFS.KD.ZG?end=2022&locations=JP&start=2014
https://www.boj.or.jp/en/about/press/koen_2023/data/ko230905a1.pdf
https://data.oecd.org/unemp/unemployment-rate.htm
Handout 1 (Chart 1)
One chart showing the annual rate of growth of real GDP for the period 2000-2023

https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/JPN?zoom=JPN&highlight=JPN
Performance of Japan
Derived from data of Handout 1

After the sharp decline of 2020 due to the pandemic, Japan demonstrated resilience and recovery. This is
clearly seen throughout the data provided, but clearly noticeable in the positive change in Real
GDP from -4.2% in 2020 to 2.2% in 2021.
Performance of Japan
Derived from data of Handout 1
Performance of Japan
Derived from data of Handout 1

The Annual Growth Rate of Real Exports of Goods and Services showed
significant recovery in 2021, surging to 11.7% after a drastic fall in 2020. This indicates a
strong rebound in global demand for Japanese goods and services .
Performance of Japan
Derived from data of Handout 1

While the export growth rate recovered strongly in 2021, the Annual Growth Rate
of Real Imports of Goods and Services also increased significantly, reaching 8% in
2022. The higher growth rate of imports compared to exports can impact the
trade balance.
Handout 1 (Table 1)

2015 2016 2017 2018 2019 2020 2021 2022 2023

Annual Growth Rate of Real GDP 1,6% 0,8% 1,7% 0,6% -0,40% -4,3% 2,1% 1% 1,3%

Annual Growth Rate of real Consumption 0,3% 0,1% 0,8% 0,4% 0.00% -2,8% 1,3% 1,9% -

Annual Growth Rate of Real Investment 2,3% 1,2% 1,6% 0,6% 0,5% -3,6% -0,1% -0,9% -

Annual Growth Rate of Real Exports of Goods and Services 3,2% 1,6% 6,6% 3,8% -1,5% -11,6% 11,7% 5,1% -

Annual Growth Rate of Real Imports of Goods and Services 0,4% -1,2% 3,3% 3,8% 1% -6,8% 5,1% 8% -

Annual Inflation Rate 0,8% -0,13% 0,49% 0,97% 0,49% 0,02% -0,24% 2,52% 3,24%

Average Rate of Unemployment for the year 3,4% 3,1% 2,8% 2,5% 2,4% 2,4% 2,8% 2,6% -
Performance of Japan
Derived from data of Handout 1

The Annual Growth Rates of Real Consumption and Real Investment have seen
fluctuations, with consumption hitting a low in 2020 and investment experiencing a decline in 2021
and 2022. This suggests variability in domestic demand and investment sentiment.
Handout 1 (Table 1)

2015 2016 2017 2018 2019 2020 2021 2022 2023

Annual Growth Rate of Real GDP 1,6% 0,8% 1,7% 0,6% -0,40% -4,3% 2,1% 1% 1,3%

Annual Growth Rate of real Consumption 0,3% 0,1% 0,8% 0,4% 0.00% -2,8% 1,3% 1,9% -

Annual Growth Rate of Real Investment 2,3% 1,2% 1,6% 0,6% 0,5% -3,6% -0,1% -0,9% -

Annual Growth Rate of Real Exports of Goods and Services 3,2% 1,6% 6,6% 3,8% -1,5% -11,6% 11,7% 5,1% -

Annual Growth Rate of Real Imports of Goods and Services 0,4% -1,2% 3,3% 3,8% 1% -6,8% 5,1% 8% -

Annual Inflation Rate 0,8% -0,13% 0,49% 0,97% 0,49% 0,02% -0,24% 2,52% 3,24%

Average Rate of Unemployment for the year 3,4% 3,1% 2,8% 2,5% 2,4% 2,4% 2,8% 2,6% -
Performance of Japan
Derived from data of Handout 1

The Annual Inflation Rate has been on an upward trend in recent years, reaching 3.24%
in 2023. While not excessively high, this upward trend in inflation requires careful monitoring to
avoid potential negative impacts on purchasing power and living costs.
Handout 1 (Table 1)

2015 2016 2017 2018 2019 2020 2021 2022 2023

Annual Growth Rate of Real GDP 1,6% 0,8% 1,7% 0,6% -0,40% -4,3% 2,1% 1% 1,3%

Annual Growth Rate of real Consumption 0,3% 0,1% 0,8% 0,4% 0.00% -2,8% 1,3% 1,9% -

Annual Growth Rate of Real Investment 2,3% 1,2% 1,6% 0,6% 0,5% -3,6% -0,1% -0,9% -

Annual Growth Rate of Real Exports of Goods and Services 3,2% 1,6% 6,6% 3,8% -1,5% -11,6% 11,7% 5,1% -

Annual Growth Rate of Real Imports of Goods and Services 0,4% -1,2% 3,3% 3,8% 1% -6,8% 5,1% 8% -

Annual Inflation Rate 0,8% -0,13% 0,49% 0,97% 0,49% 0,02% -0,24% 2,52% 3,24%

Average Rate of Unemployment for the year 3,4% 3,1% 2,8% 2,5% 2,4% 2,4% 2,8% 2,6% -
Performance of Japan
Derived from data of Handout 1

Japan maintained a relatively low average rate of unemployment throughout the

period, highlighting the strength of its labor market. Even in 2020, the rate stood at 2.4%, which is
quite low by international standards.
Handout 1 (Table 1)

2015 2016 2017 2018 2019 2020 2021 2022 2023

Annual Growth Rate of Real GDP 1,6% 0,8% 1,7% 0,6% -0,40% -4,3% 2,1% 1% 1,3%

Annual Growth Rate of real Consumption 0,3% 0,1% 0,8% 0,4% 0.00% -2,8% 1,3% 1,9% -

Annual Growth Rate of Real Investment 2,3% 1,2% 1,6% 0,6% 0,5% -3,6% -0,1% -0,9% -

Annual Growth Rate of Real Exports of Goods and Services 3,2% 1,6% 6,6% 3,8% -1,5% -11,6% 11,7% 5,1% -

Annual Growth Rate of Real Imports of Goods and Services 0,4% -1,2% 3,3% 3,8% 1% -6,8% 5,1% 8% -

Annual Inflation Rate 0,8% -0,13% 0,49% 0,97% 0,49% 0,02% -0,24% 2,52% 3,24%

Average Rate of Unemployment for the year 3,4% 3,1% 2,8% 2,5% 2,4% 2,4% 2,8% 2,6% -
 HANDOUT 2
Money and Financial Markets

MACROECONOMICS BBABID - Paula, Lola, Alvaro, Leonie

Handout 2 (Chart 1)
a) Prepare a chart presenting the central bank interest rate (official interest rate) monthly average, for the period2010-2023 and that of a large country or region
(US, EU, etc.)

https://fred.stlouisfed.org/series/IRSTCB01JPM156N
https://fred.stlouisfed.org/series/FEDFUNDS
Handout 2 (Chart 2)
b) a chart presenting the yield on 10-year government bonds (JAPAN), monthly average, for the period 2010-2023 and that of a large country or region (US, EU, etc.)

https://fred.stlouisfed.org/series/IRLTLT01USM156N
https://fred.stlouisfed.org/series/IRLTLT01JPM156N
Performance of Japan
Derived from data of Handout 2

Constant central bank interest rate signals stability and confidence in the economy.

It provides predictability for businesses and investors, fostering economic activity and helps stabilize
exchange rates and promotes economic stability.

However, it may indicate policy inertia and risk imbalances if not responsive to
economic changes. Constant low rates could lead to inflation, while reluctance to adjust rates might
delay necessary corrections, risking recession
Performance of Japan
Derived from data of Handout 2

The yield on Japanese bonds lower than the US ones indicates perceived safety of Japanese bonds.
Monetary policy differences contribute; Japan may have a more accommodative stance.
Economic outlook and inflation expectations in Japan might be subdued. Global factors like interest
rate differentials and market sentiment also play a role. Yield gap reflects risk perceptions, monetary
policy disparities, economic outlooks, and global market dynamics.
 HANDOUT 3
Labor Market

MACROECONOMICS BBABID - Paula, Lola, Alvaro, Leonie

Handout 3 (Table)
A table for the period 2010 to 2023 showing at the same time: the average annual unemployment rate, the average annual wage growth and average annual inflation
Handout 3 (Chart)
A chart for the period 2010 to 2023 showing at the same time: the average annual unemployment rate, the average annual wage growth and average annual inflation
Performance of Japan
Derived from data of Handout 3 – Inflation Overview

The early years of the economy were marked by deflationary forces, which were followed by
modest inflation until dramatically peaking in 2014. Inflation rates were comparatively higher from
2014 to 2024, with the next large increase occurring in 2022 and 2023.

Overall, the rate of inflation stayed within reasonable bounds, as the general optimum is
considered at 2%, however certain years' surges could be a sign of impending financial difficulties,
especially that of 2023, which surpasses the goal of 2% by 1.2%.
Performance of Japan
Derived from data of Handout 3 – Inflation Overview
Performance of Japan
Derived from data of Handout 3 – Real World Parallels

Deflationary Pressures (2010–2013): During this time, Japan saw ongoing deflationary pressures, mostly
brought on by ageing populations, stagnant consumer demand, and slow economic growth. These elements caused
companies to lower their pricing in an effort to draw in clients, which caused prices to spiral down.

Abenomics and Inflation Targeting (2013-2019): In order to stave off deflation and promote economic
expansion, Prime Minister Shinzo Abe unveiled Abenomics, his economic revival plan, in 2013. Aggressive monetary
policies, such as quantitative easing and a 2% inflation target, were put into place by the Bank of Japan (BOJ). As a
result, from 2014 until 2019, when the economy started to show signs of recovery, inflation rates were mild.

COVID-19 Pandemic (2020): Japan was impacted by the worldwide economic crisis that resulted from the
COVID-19 pandemic epidemic. Despite the BOJ's efforts to stabilise the economy, Japan faced deflationary pressures
again in 2020 due to decreasing consumer spending, strained supply chains, and a decline in economic activity, which
continue to be the trend for this 2024.
Performance of Japan
Derived from data of Handout 3 – Wage growth Overview

Over time, there have been notable fluctuations in wage growth, exhibiting both positive and
negative values. 2012, 2014, 2022, and 2024 had comparatively faster salary growth. Nonetheless, negative
wage growth in 2025, 2018, 2019, and 2016 may point to times of economic
stagnation or slump.

It is particularly interesting to point out the record low 0f -9.5 In 2023 followed by the record high of 8.38 the
year following. The predicted fall from this number shows a that it is somewhat volatile and the measures
implemented are having very drastic results, it can also be due to the distortions from the base effect.
Performance of Japan
Derived from data of Handout 3 – Wage growth Overview
Performance of Japan
Derived from data of Handout 3 – Real World Paralells

Structural Difficulties and Wage Stagnation (2010-2015): The ageing population, younger
generations' diminishing labour force participation, and Japan's reliance on contract and part-time labour were
among the fundamental issues facing the country's economy. The aforementioned reasons played a role in the
period's slow wage growth, as employers were reluctant to raise pay in the face of unstable economic conditions.

Reforms to the Labour Market (2016–2019): The labour market reforms that the Japanese
government implemented in 2016 were aimed at resolving concerns including salary inequality and unstable
employment. The objectives of these reforms were to raise non-regular workers' pay and enhance their working
circumstances. Although there were some improvements, the slow pace of structural reforms was reflected in the
muted wage increase.

Impact of COVID-19 (2020–2021): The COVID-19 pandemic made Japan's labour market problems
worse. Numerous companies adopted cost-cutting strategies, including pay cuts and job losses, in order to deal with
the economic slump. Due to lower income and employment instability, workers saw negative wage growth in 2020
and 2021.
Performance of Japan
Derived from data of Handout 3 – Unemployment rate

Over time, the average annual rate of unemployment declined progressively, suggesting a
somewhat stable labour market. Nonetheless, there was a minor rise in 2021 and a subsequent minor fall in
2022. Over the course of the time, the unemployment rate mostly stayed at acceptable levels
despite minor variations.
Performance of Japan
Derived from data of Handout 3 – Unemployment rate
Performance of Japan
Derived from data of Handout 3 – Unemployment rate

Dynamics of the Unemployment Rate: Gradual Fall and Structural Elements (2010-2019):
Over time, Japan's unemployment rate decreased progressively, indicating advancements in the labour
market. This growth was fueled by structural causes like labour market reforms and demographic shifts,
which also created more job opportunities in industries like tourism, technology, and healthcare.

Pandemic-Related Volatility (2020–2021): The COVID-19 pandemic caused severe economic

uncertainty, upended international supply lines, and caused swings in Japan's jobless rate. Although the
government's stimulus plans partially offset job losses, industries including retail, transportation, and
hospitality were severely hit, which resulted in brief increases in unemployment in 2020 and 2021.

Recently there hasn’t been much observable improvement and multiple articles pop up dubbing these recent
years as the second coming of the lost decades.
 THANK YOU!

MACROECONOMICS BBABID - Paula, Lola, Alvaro, Leonie

Bibliography
Masai, Yasuo. “Economy of Japan.” Encyclopædia Britannica, Encyclopædia Britannica, inc., Feb. 2024,
www.britannica.com/money/economy-of-Japan.

OECD Yearbook - Organisation for Economic Co-Operation and Development, 2020, www.oecd.org/forum/oecdyearbook/japan-
economic-revival.htm.