OECD ECONOMIC SURVEY OF
JAPAN Increasing resilience to shocks Tokyo 11 January 2024 oe.cd/japan
@OECDeconomy @OECD
The post-pandemic rebound has lost momentum with domestic demand moderating Gross Domestic Product Volume, index 2019Q4=100 Japan
OECD
110
110
105
105
100
100
95
95
90
90
85
85
80
2019Q4
Source: OECD National Accounts database.
2020Q4
2021Q4
2022Q4
80
Inflation remains above the 2% target Consumer price inflation % 5
Headline
4
Excluding fresh food
5
Excluding food and energy
4
3
3
2
2
1
1
0
0
-1
-1
-2
-2
-3
2016
2017
2018
Source: Ministry of Internal Affairs and Communications.
2019
2020
2021
2022
2023
-3
Nominal wages have been trending up Total wages 3-month moving average Index 2020=100, seasonally adjusted 115
Nominal wages
115
Real wages
110
110
105
105
100
100
95
2010
2012
Source: Ministry of Health, Labour and Welfare.
2014
2016
2018
2020
2022
95
Growth is set to moderate and inflation is projected to be 2% in 2025 2023
2024
2025
Real GDP growth, %
1.9
1.0
1.1
Headline consumer price inflation, %
3.2
2.6
2.0
Gross public debt, % of GDP
243.5
243.3
242.3
Source: November 2023 OECD Economic Outlook database, updated to take into account the 8 December 2023 Japanese national accounts release.
Addressing fiscal challenges
Structural and fiscal reforms are needed to ensure fiscal sustainability Gross government debt % of GDP
300
Japan
United States
300
OECD
250
250
200
200
150
150
100
100
50
50
0
1990
1995
Source: OECD Economic Outlook database.
2000
2005
2010
2015
2020
0
7
Reducing the length of hospital stays can increase the efficiency of health and long-term care spending Average length of hospital stay for inpatient care Days, 2021 30 25 20 15 10
JPN
KOR
HUN
CZE
PRT
LUX
FRA
DEU
ITA
AUT
OECD
LVA
CHE
LTU
EST
SVK
FIN
ESP
POL
GRC
GBR
CRI
BEL
USA
SVN
IRL
NOR
NZL
ISR
ISL
SWE
AUS
0
TUR
5
Source: OECD Healthcare Utilisation database. 8
Gradually increasing consumption taxes can help finance new planned expenditures Standard value-added tax rates %, 2022 30 25 20 15 10
Note: OECD aggregate refers to the unweighted average. Source: OECD, Revenue Statistics database.
SWE
NOR
DNK
ISL
FIN
GRC
IRL
PRT
ITA
ESP
LVA
BEL
NLD
AUT
GBR
FRA
OECD
DEU
TUR
ISR
MEX
NZL
KOR
AUS
JPN
0
CHE
5
9
The use of supplementary budgets should be limited to large macroeconomic shocks National general account budget Trillion yen 180
180
160
160
Third Second First supplementary budget Initial budget
140
140
120
120
100
100
80
80
60
60
2012
2013
2014
Note: Horizontal axes show fiscal years. Source: Ministry of Finance.
2015
2016
2017
2018
2019
2020
2021
2022
2023
10
Boosting productivity growth
Productivity growth should be revived GDP per hour worked USD, current PPPs, 2022 100
100
80
80
60
60
40
40
20
20
0
JPN
OECD
Source: OECD, Productivity database.
CAN
ITA
GBR
FRA
DEU
USA
0
12
Weakly targeted support for small and medium-sized enterprises should be reduced to boost business dynamism Loan guarantees Trillion yen 45
45
40
40
35
35
30
30
25
25
20
20
15
15
10
10
5
5
0
0
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Note: Data refer to government guarantees of banks’ loans to SMEs and the horizontal axis refers to fiscal years. 2023 data are as of September. Source: Japan Federation of Credit Guarantee Corporations.
2023
13
Limiting demographic headwinds
Population ageing is projected to continue Old-age dependency ratio 90 80
% 2022
Estimated increase by 2050
90 80 70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
MEX ISR COL AUS ISL CRI TUR LUX USA NZL CAN SWE CHL NLD GBR OECD DNK BEL IRL NOR CHE HUN DEU FIN EST CZE AUT FRA SVK POL LTU SVN LVA ESP ITA PRT GRC JPN KOR
70
Note: 65 and older as a share of the population aged 20 to 64. Source: OECD, Demography and Population Statistics database.
Increasing the take-up and duration of parental leave by fathers can boost fertility rates Take-up of parental leave %
100
Women
100
Men
80
80
60
60
40
40
20
20
0
2007
2008
2009
2010
Source: Ministry of Health, Labour and Welfare.
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
0
Abolishing the right of firms to set mandatory retirement would increase employment Mandatory retirement age set by firms Share of firms using mandatory retirement in %
100
2015
100
2022
80
80
60
60
40
40
20
20
0
0
60
61-64
Source: Ministry of Health, Labour and Welfare, General Survey on Working Conditions.
65 and over
Other
Employment protection for formal workers should be relaxed to increase the share of females in regular jobs Non-regular workers as a share of all employees % 60
60
50
50 Women
40
40
Men 30
30
20
20
10
10
0
0
1986
1990
1994
1998
2002
2006
Source: Ministry of Internal Affairs and Communications, Labour Force Survey, Basic Tabulation.
2010
2014
2018
2022
A comprehensive strategy to integrate migrants is needed to attract high-skilled foreign workers Quality of opportunities for highly-educated immigrants, 2023 0 = worst, 1= best 1.0
0.8
0.8
0.6
0.6
0.4
0.4
0.2
0.2
0.0
0.0
CRI ESP KOR GRC CHL ITA NLD JPN COL AUS MEX ISL DEU FIN CHE ISR OECD NOR FRA TUR BEL SWE DNK EST IRL AUS POL PRT CAN SVN GBR NZL USA LTU LTV CZE LUX SVK HUN
1.0
Source: OECD, Migration Statistics database.
Addressing environmental challenges
Meeting emission reduction targets requires bold and efficient policies Total greenhouse gas emissions
Million tonnes of CO2 equivalent
1 600
1 600
1 400
1 400
1 200
1 200
1 000
1 000
800
800 Total emissions
600
600
Linear path to targets
400
400
2030 target
200
200 0
1990
2000
2010
2020
2030
2040
Note: The linear path is the interpolated path to the emission reduction targets relative to 2018 levels for 2030 (-46%) and 2050 (net zero emissions). Source: OECD, Greenhouse Gas Emissions database and OECD calculations.
2050
0
Enhancing the electricity grid would boost the contribution of renewables to electricity generation Share of renewables
% of electricity generation 35
Japan
35
OECD
30
30
25
25
20
20
15
15
10
10
5
5
0
0
2000
2002
2004
2006
2008
Source: IEA (2022), IEA World Energy Statistics and Balances database.
2010
2012
2014
2016
2018
2020
2022
Main messages Fiscal
Contain ageing-related expenditures and gradually increase revenues to put public debt on a downward trend and improve the fiscal framework
Adopt a comprehensive approach to raise fertility, the employment of women and Demographics older persons and inflows of foreign workers and boost productivity
Green
Promote renewables, ensure planned carbon pricing policies follow international best practices and improve contingency planning in emission reduction plans
OECDEconomy OECD
For more information
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