October 2024
This report comprehensively analyses Japan's current macroeconomic landscape. It focuses on advancements in key sectors, such as artificial intelligence, quantum technology, and digital assets.
As the world's fourth largest economy, prospects for Japan's growth rate are modest, with external demand and strong exports likely to drive it. Meanwhile, even though real GDP growth forecasts have been revised down from 0.9% in October 2023, to 0.3% in October 2024, inflation dynamics are improving (meaning prices are edging up) and wage growth increasing. However, challenges remain, notably the declining population, which poses long- term economic risks.
Japan's government is actively investing in innovation, particularly in quantum technology and digital assets. With significant public funding and a robust patent application rate, Japan ranks among the top nations in quantum advancements. The digital asset market is also evolving, with authorities establishing regulatory frameworks to support cryptocurrencies and stablecoins. Japan is also putting a lot of stock in tapping the benefits of AI—and what it could do for productivity amid the rapid ageing of the population, for example—to help fuel economic growth and bring societal benefits.
As such, while Japan faces structural challenges, it is well-positioned to leverage emerging technologies to remain competitive and foster long-term economic growth.
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