Japan's industrialized, free-market economy is the second-largest in the world. Japan is known for its high living standard. While Japan's long-term economic prospects are considered good, Japan is currently in its worst period of economic growth since World War II. Plummeting stock and real estate prices in the early 1990s marked the end of the "bubble economy."


The Asian financial crisis of 1997-98 also had severe impact on the economy. The GDP growth rate was 2.3% in 2004 and 2.6% in 2005. It is estimated to have touched 2.7% in 2006. Unemployment has decreased since 2003 and touched nearly 4.1% of the active population in 2006. IMF forecasts a growth rate of 2.1% in 2007. Japan still has to face structural difficulties such as its public debt accounting for 160% of the GDP in 2005, its fragile banking sector, and a deflationary pressure.


Only 15% of Japan's land is suitable for cultivation. The agricultural economy is highly subsidized and protected. Agriculture contributes only 1.3% to the GDP and employs just 7% of the active population.


Tea and rice are the two main crops. Japan is the world's largest fish producer (also the consumer), and the world's second largest paper producer. Japan is the largest market for U.S. agricultural exports. The industrial sector contributes nearly 30% to the GDP, but shows variations: some sectors such as automobiles, robotics, micro-technology are very competitive, while as others like building & construction and supermarkets show less productivity.


Japan is now increasingly relocating its production activities towards low-cost neighboring country China. Deposits of gold, magnesium, and silver meet Japans current industrial demands. The service sector accounts for nearly 68% of the GDP.


Despite its current slow economic growth, Japan remains a important trade partner both in Asia and globally, especially in the sector of automobiles. The share if foreign trade in its GDP is around 25%. Its top three export partners are: the USA, China and South Korea.


The commodities mainly exported are vehicles, electric equipment, machinery and optical & measuring equipment. The top three import partners are: China, the USA, and Saudi Arabia. The commodities mainly imported are mineral fuels & oils, electronic components, machinery, optical products and ores & ash.


Economic Indicators


Economic forecasts


Indicators

2006

2007

GDP (USD billion)

4463.6

4599.4

GDP (constant prices, annual % change)

2.7

2.1

GDP per capita (USD)

34954.7

36021.2

Inflation rate (consumer prices, annual % change)

0.3

0.7

Source: IMF - World Economic Outlook Database


General economic indicators


Indicators

2003

2004

2005

GDP (USD billion)(1)

4237.1

4587.1

4567.4

GDP (constants prices, annual % change)(1)

1.8

2.3

2.6

GPD per capita (USD)(1)

33198.6

35914.2

35756.5

Inflation (consumer prices, annual % change)(1)

-0.3

0

-0.6

Unemployment rate (%)(2)

5.2

4.7

..

External debt (USD billion)(3)

..

..

..

Official exchange rate per USD (period average)(3)

115.9335

108.1926

110.2182

Source: (1) IMF - World Economic Outlook Database, (2) ILO - Key Indicators of the Labour Market, (3) World Bank - World Development Indicators

 

General economic indicators


Indicators

2003

2004

2005

GDP (USD billion)(1)

4237.1

4587.1

4567.4

GDP (constants prices, annual % change)(1)

1.8

2.3

2.6

GPD per capita (USD)(1)

33198.6

35914.2

35756.5

Inflation (consumer prices, annual % change)(1)

-0.3

0

-0.6

Unemployment rate (%)(2)

5.2

4.7

..

External debt (USD billion)(3)

..

..

..

Official exchange rate per USD (period average)(3)

115.9335

108.1926

110.2182

Source: (1) IMF - World Economic Outlook Database, (2) ILO - Key Indicators of the Labour Market, (3) World Bank - World Development Indicators


Foreign Trade


General indicators


Indicators (USD billion)

2003

2004

2005

Imports of goods

382.9

454.5

516.1

Exports of goods

471.8

565.7

595.8

Trade balance

68.8

..

..

Current account

156.3

172.1

165.8

Source: World Bank - World Development Indicators


Trade in goods/services by major category


2004

Imports

Exports

Total Trade in Goods (USD billion):

454.5

565.7

Agricultural raw materials

2.4

0.5

Food products

11.6

0.5

Hydrocarbons

21.7

0.4

Manufactured products (chemicals, machines,...)

57

92.8

Ores and metals

5.8

1.6

Source: World Bank - World Development Indicators


Trade by partner countries


Main Customers (% of exports)


USA

22.9%

China

13.5%

Rep. of Korea

7.8%

Hong Kong

7.3%

Australia

6.0%



Main suppliers (% of imports)


China

21.0%

USA

12.7%

United Arab Emirates

4.9%

Australia

4.8%

Source: Comtrade, 2005

 

Foreign Direct Investment inflows in Japan


FDI inflows

2003

2004

2005

World rank (*) 2005

FDI inflows (USD million)

6 324

7 816

2 775

131/141

Source: UNCTAD - World Investment Report

Imports of Readymade Garments by Japan & India's share as supplier


India's Exports of the RMG to Japan (i.e. knit and woven apparel) showed an increase of 39.40% in 2005-06. In value terms, India's Exports of Readymade Garments to Japan was to the tune of US$ 84.92 Million in the year 2004-05 which grew in the year 2005-06 to cross the 100 Million of US$ 118.38 Million.  Japan constituted 1.37% share in India's Exports of RMG in the year 2005-06.  RMG constituted 4.77% share in India's Total Exports to Japan. 


While Woven apparel (HS 62) constituted 88% share in India's RMG exports to Japan, Knit apparel only constituted 12% share in India's RMG Exports to Japan.  In India's RMG Exports to Japan, Woven apparel showed a growth of 42.11% whereas growth in exports of Knit apparel is only half i.e. 22.30% in the year 2005-06. 


India's Exports of RMG to Japan during the last 5 years is depicted below: -



 

As per the WTO Figures released for Leading Clothing Importers, Japan appeared as the third largest importer of clothing in the year 2005 after EU & USA with a 7.8% share in total Clothing Imports with a total value of Imports worth US$ 21.19 Billion showing a growth of 3.56%.


Japan's RMG Imports from India have shown an increase of 31.63% over previous year and Indias share is only 0.67%.  Woven apparel constitute a major share in Japan's total RMG Imports and Imports from India, though the share of Woven apparel has showed a minor decline of more than 2% in both Global Imports as well as Imports from India.  Imports of Knit Apparel from India have   shown an increase of 13.32%. 


Total import of RMG by Japan during January- October amounted to US$ 18.79 Billion showing a growth of 5.22% over the previous year. RMG constitute 3.92% share in Japan's total imports. While Knit apparel constituted 45.92% share in Japan's total RMG Imports, Woven apparel constituted 54.08% share in Japan's total RMG Imports thereby showing growth of 5.41% and 5.06% respectively.


Major Supplier Countries to Japan for RMG


Rank

Country

Value of Imports in Million US$

% Share

% Change in Imports Value

%age Change in Share

2003

2004

2005

2003

2004

2005

2005/
2004

2005/
2004


Total RMG Imports

18391.37

20460.11

21188.05

100

100

100

3.56

0.00

1

China

15009.12

16862.45

17448.49

81.61

82.42

82.35

3.48

-0.08

2

Italy

936.29

994.54

965.07

5.09

4.86

4.55

-2.96

-6.30

3

Vietnam

484.48

548.06

588.09

2.63

2.68

2.78

7.30

3.62

4

Korea, South

286.16

264.75

373.58

1.56

1.29

1.76

41.11

36.26

5

United States

204.50

224.01

258.86

1.11

1.09

1.22

15.56

11.59

6

Thailand

218.10

231.35

236.70

1.19

1.13

1.12

2.31

-1.20

7

France

223.21

220.67

191.08

1.21

1.08

0.90

-13.41

-16.39

8

India

92.13

107.20

141.11

0.50

0.52

0.67

31.63

27.11

9

Indonesia

125.43

117.43

115.14

0.68

0.57

0.54

-1.95

-5.32

10

Philippines

85.01

91.51

90.71

0.46

0.45

0.43

-0.88

-4.28


Total for Top 10

17664.43

19661.97

20408.83

96.05

96.10

96.32

3.80

0.23


The above tabulation shows that there is an increase of 27.11% in India's share. However, South Korea, USA and Vietnam's share have also increased. France's share has showed a decline of- 16.39% in the year 2005 as compared to previous year.


There is also a miniscule decline in Chinas share, though imports from China showed an increase of 3.48% in the year 2005. Though in case of South Korea the imports in the year 2004 showed a decline but it soon recovered and showed an increase of more than 40% in the year 2005.  Imports from France have showed a decline subsequently in last two years. 


The top garments products of import by Japan under RMG are Jerseys, T-Shirts of Cotton, Sweaters, Trousers, bibs, Men's or Boys' Cotton Shirts, blouses Of Cotton, woolen suits, whereas top items imported from India are quite different and comprise of Blouses, shirts, blouses of cotton, skirts, divider skirts, of cotton, dresses of cotton, other women's or girls' garments as can be seen from the above tabulation.


Source: http://aepc.fibre2fashion.com/vol1issue22/