Export Britain

Japan

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Ease of trading across borders

Importing a standard container of goods into Japan requires:

Introduction

Japan in 2013 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. The new government will continue a longstanding restructuring of the economy and reining in Japan's huge government debt, which exceeds 225% of GDP. Persistent deflation, reliance on exports to drive growth, and an aging and shrinking population are other major long-term challenges for the economy.

Economic snapshot (% annual growth rate)

	2011	2012	2013-16
GDP	1.4	1.6	1.3
Export of goods and services	-0.1	1.6	-6.7
Import of goods and services	5.4	3.3	-5.2
Inflation	0	0.4	-1.5
Exchange rate (per £)	125	145	159
Population	-0.2	-0.2	0.3
Short-Term interest rates (%)	0.2	0.2	0.6
Unit Labour Cost	-1.2	-0.8	-0.6
Source: Oxford Economics

Economic outlook

GDP data for Q4 proved disappointing, with the 0.3% quarterly rise well below expectations. Japan is in the middle of a substantial monetary easing programme aimed at boosting its economy. The next big test comes in April 2014 with an increase in the 5% sales tax to 8% this will likely curb consumer spending and economic growth. Consumer spending, which accounts for more than 50 percent of GDP will be the main concern slowing the growth rate for 2014 to 1.5%.

Trade outlook

Japan's most important trade partners are China and the US, followed by South Korea, Taiwan, Hong Kong, Singapore, Thailand and Germany. Japanese export and import volumes have been slow to pick up. In the first three quarters of 2013 import volumes barely budged, although recent months have seen a stronger trend with Q4 2013 seeing import growth of around 9% on a year earlier. Japan’s large devaluation may also have a negative impact in the short term at least on some of the lower-income countries in Asia, whose dependence on Japan as an export market is greater. Japan has a trade surplus. The most important import goods are raw materials such as oil, foodstuffs and wood. Major suppliers include China, followed by the US, Australia, Saudi Arabia, South Korea, Indonesia and the United Arab Emirates.

SWOT analysis

Strengths Leading country in scientific and technological research and development. Sophisticated consumers with high purchasing power.	Weaknesses Declining birth rate.
Opportunities High dependence on exports. Established home of innovation.	Threats Fiscal austerity programme. Natural disasters.

Opportunities for UK businesses

Japan holds plenty of promise for businesses looking to operate in a large stable market. Japan remains the high-tech powerhouse economy of Asia - with the 2nd highest spend worldwide on R&D. With a population of 128 million, the Japanese market is characterised by consumers with high levels of disposable income. The following sectors offer UK businesses great opportunities: services, technology, life sciences, manufacturing and with Japan hosting the Olympics in 2020 UK’s expertise are in great demand.

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