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JAPAN FOREIGN TRADE
As a percentage of current-price GDP, the value
of Japan's two-way foreign trade in 2003 was just over 18%, which was lesser than that of many high-income countries. The closed nature of Japan's economy is also apparent in comparisons with other countries in Asia, such as China, which in the same year saw foreign trade reach nearly 60% of current-price GDP. This is largely owing to official and unofficial restrictions on merchandise imports, which remain in place, despite pressure from the US and other important trading partners, to protect the less efficient sectors of Japan's industry, such as textiles, food and pulp and paper. This lack of openness to foreign trade has often been cited as one of the reasons for the persistence of structural problems in the country's economy in general and the poor productivity of companies in the non-tradable sectors in particular.
However, the current account balance has been in surplus and the competitive strength of Japanese industry has increased steadily.
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A current account balance surplus was achieved every year since 1960s except for a couple years following the oil crisis of 1973.
The current account balance of Japan, as on September 2004, was estimated to be US $ 41.7 billion.
CHALLENGES FACING JAPAN
Despite improvement in some sectors, however, many companies still bear a heavy cost burden from surplus facilities, surplus employees, and excessive debt.
In addition to having to deal with business trends such as deregulation and globalization, Japanese industry is also
affected by the aging of Japanese society. In 1998 only 16.2% of the population was 65 or older, but by 2025 this figure is expected to be about 27%. This will mean an
increase in the tax and social security burden that workers will have to carry, while at the same time it is likely that a drop in savings will depress capital accumulation. It is also possible that the resulting labor shortages will be a factor limiting growth potential.
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