JETRO Focus Newsletter June 2006

JETRO's Focus Newsletter series provides readers with a bi-monthly snapshot of Japan's macroeconomy, as well as other important topics and trends. It is designed to analyze current developments, including those relating to Japan's economy, its business, financial, investment and political environment, as well as relevant social and cultural themes.  Subscribe online to JETRO Focus

Recent editions have covered issues including rising entrepreneurship and investor interest in Japan, the economic integration of East Asia, changing business and corporate practices, structural and corporate reform and the potential impact of postal savings reform.

 Download June 2006 newsletter (520 KB)

Recent Data Indicates Japan is Maintaining its Strong Performance
In the first quarter of 2006, Japan's GDP increased by an unexpectedly high 0.5%. This equaled an annualized rate of 1.9%, twice the rate analysts had expected. Japan's solid performance led the Governor of the Bank of Japan (BOJ) Toshihiko Fukui to comment, "we think there will be a long-lasting recovery.”

Japanese Demographic Trends Present Both Challenges and Opportunities
The Japanese government estimates that Japan's population -- currently estimated at approximately 128 million people -- will fall to roughly 120 million by 2025 and 100 million by 2050. It is also believed Japan will have the world's second largest percentage of people aged 65 and over by 2050.

Economic Growth Will Require Changes in Fiscal and Monetary Policy Orientation
During the 1990s, the Japanese government committed large amounts of capital to public works projects and other initiatives to stimulate economic growth and temper the pain resulting from economic restructuring and rationalization.  While this brought various benefits and helped to ease this transition, Japan's fiscal stimulus policy also produced record levels of public indebtedness. 

Social Adjustments are Accompanying Japan's Movement toward Greater Competitiveness
Japan's post-war economic model emphasized business expansion, controlled competition and the acquisition of ever-larger global market shares rather than profit maximization and efficiency.  At the level of the individual employee, it stressed lifetime employment, loyalty to one's employer, and promotion on the basis of seniority rather than individual initiative and drive. 

Japan Can Now Attend to Remaining Challenges to Further Enhance Growth & Momentum
Japan's ability in recent years to address its most urgent problems now allows business and government leaders to identify additional challenges in an effort to accentuate the progress that has been achieved. By confronting obstacles such as those outlined above, Japan is seeking to further enhance efficiency and to implement the measures and maintain the social consensus necessary to make Japan an even more attractive business and investment environment.