Japan's industrialized, free-market economy is the second-largest in theworld. 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 ofeconomic 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 impacton the economy. The GDP growth rate was 2.3% in 2004 and 2.6% in 2005. It isestimated to have touched 2.7% in 2006. Unemployment has decreased since 2003and touched nearly 4.1% of the active population in 2006. IMF forecasts agrowth rate of 2.1% in 2007. Japan still has to face structural difficultiessuch as its public debt accounting for 160% of the GDP in 2005, its fragilebanking sector, and a deflationary pressure.
Only 15% of Japan's land is suitable for cultivation. Theagricultural economy is highly subsidized and protected. Agriculturecontributes 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 secondlargest paper producer. Japan is the largest market for U.S. agricultural exports. The industrial sector contributes nearly 30% to the GDP, butshows variations: some sectors such as automobiles, robotics, micro-technologyare very competitive, while as others like building & construction andsupermarkets show less productivity.
Japanis now increasingly relocating its production activities towards low-costneighboring country China. Deposits of gold, magnesium, and silver meet Japanscurrent industrial demands. The service sector accounts for nearly 68% of theGDP.
Despite its current slow economic growth, Japan remains a important trade partner both in Asia and globally, especially in the sector ofautomobiles. The share if foreign trade in its GDP is around 25%. Its top threeexport partners are: the USA, China and South Korea.
The commodities mainly exported are vehicles, electricequipment, machinery and optical & measuring equipment. The top threeimport partners are: China, the USA, and Saudi Arabia. The commodities mainlyimported are mineral fuels & oils, electronic components, machinery,optical products and ores & ash.
Economic Indicators
| 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 |
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 |
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/ |
2005/ | ||
|
|
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: AEPC newsletter
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