Japan Economic Snapshot

The COVID-19 pandemic hit the economy hard, provoking a marked downturn. Economic activity tumbled as sanitary restrictions restrained consumption and investment. Workers and households with weaker attachment to employment tended to be most affected. However, robust government support and the reopening of the economy led to a partial bounceback. Growth is on course to regain momentum, supported by macroeconomic policies and progress in vaccination.

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The re-introduction and expansion of the fourth state of emergency in July held back the economic recovery. Significant progress in vaccination and falling rates of infection are now supporting the resumption of stronger consumption growth and lifting investment, as supply chain disruptions are resolved. A new economic policy package will boost activity. As a result, the economy is projected to grow by 1.8% in 2021, 3.4% in 2022 and 1.1% in 2023.

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2021 Structural Reform Priorities

• Labour market: Support the employment of all available talents, allowing various work styles
• Competition and regulation: Ease entry barriers and raise productivity, especially in services, agriculture and SMEs
• Education and skills: Provide equal and improved education opportunities to all students
• Tax system: Improve the efficiency of the tax system for sustainable growth and public finances
• Environmental policy: Step up research and development and financing for meeting GHG emission goals

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