Japan is the world’s third largest economy accounting for 9.6% of global GDP (2012). It has an affluent population of 126 million and boasts the second largest number of millionaire households in the world. The Japanese consumer market is one of the largest in the world, and its economy is rules-based and transparent. Japan invests highly in research and development which has gone a long way in ensuring the technological prowess of Japanese firms.
In recent years Japan has experienced a sustained period of low growth and deflation, leading to a number of challenges. Some of the issues faced by Japan include an ageing and shrinking population, and unprecedented public debt levels (over 200% of GDP).
Increased energy imports have also put Japan’s traditional trade surplus under pressure following the Fukushima nuclear accident. The government’s economic policy, known as “Abenomics”, is an attempt to deal with these issues through monetary easing, fiscal spending and structural reform.
Alliance with the US remains the “cornerstone” of Japan’s foreign policy and national security. Japan also has extensive relationships with China and the Republic of Korea (ROK). Japan does not have formal diplomatic relations with the Democratic People’s Republic of Korea (DPRK) and has expressed concerns about its nuclear and missile programmes and its abduction of Japanese citizens.
Japan is an active member of the United Nations, the G7, the G20, the World Trade Organisation (WTO) and the Organisation for Economic Cooperation and Development (OECD). It is also a member of regional fora such as APEC, the ASEAN Regional Forum (ARF), ASEAN+3 (Japan, China, and Korea) and the East Asia Summit (EAS).
BILATERAL TRADE: NZ - JAPAN
A major bilateral and regional partner of New Zealand, Japan shares strong political ties with NZ underpinned by a common views, shared interest in stability, growth and development of the Asia Pacific region, and substantial trade, economic, tourism and people-to-people linkages.
Bilateral trade between the two countries is complementary with New Zealand supplying industrial inputs and food products, and Japan exporting finished industrial goods and machinery.
Services exports between NZ & Japan add significantly to bilateral trade, particularly in the education and tourism sectors. Japan is New Zealand’s fourth largest source of investment.
Japan and New Zealand commenced negotiations for a Regional Comprehensive Economic Partnership (RCEP) in mid-2013. RCEP also involves ASEAN countries, Australia, China, India and the Republic of Korea. In July 2013, Japan was also welcomed to the TPP negotiating table by the existing 11 TPP participants.
A working holiday scheme enables people up to the age of 30 to visit, work and study in each country for up to 12 months. The New Zealand/Japan Exchange Programme (NZJEP) supports academic research. Cultural and education exchanges are supported by the Asia New Zealand Foundation.
Japan is New Zealand’s third largest source of overseas students (after China and India) and New Zealand is a popular destination for Japanese students of English.
Trade Statistics: (Year Ending December 2014)
NZ Exports to Japan: $2.94 billion (4th largest export market)
Major Exports include: Aluminium, wood and wood pulp, dairy products (cheese, casein), fruit and nuts, meat
NZ Imports from Japan: (CIF) $3.14 billion (4th largest import market)
Major Imports include: Vehicles and vehicle parts, petroleum (non-crude) oils and other machinery and parts (including photography/cinematography equipment)
KEY ECONOMIC FACTORS
Nominal GDP: USD4, 787.9 billion/JPY493 trillion (projected)
GDP Per Capita: (PPP) USD37, 539 (projected)
Real GDP Growth: 0.9 % (projected)
Current Account: USD187 billion
Goods Exports: USD619 billion
Goods Imports: USD727 billion
Source: Ministry of Foreign Affairs & Trade, North Asia Division