Steven Wyble is online content editor at Scotsman Guide Media.
Reach him at (800) 297-6061 or firstname.lastname@example.org.
Since signing the Treaty of Kanagawa with the U.S. in 1854 and openings its borders,
Japan has grown to become one of the world’s largest economies, behind only
the United States, China and the European Union (if measured as a single country).
Nevertheless, Japan faces numerous challenges to the continued growth of its economy.
In March 2011, Japan was hit with the strongest earthquake in its history. The
9.0-magnitude quake and subsequent tsunami killed nearly 16,000 people and
decimated the country’s infrastructure, including seriously damaging the Fukushima
Daiichi nuclear power plant. The damage caused by the natural disaster was a blow
to both the country’s economy and its energy infrastructure.
Despite this setback, Japan’s economic growth has steadily, though slowly, inched
upward in the past few years, posting five consecutive quarters of growth. There are
signs of trouble, however, such as machinery orders dropping 3. 6 percent this past
May compared to April — falling well short of the 1.7 percent increase economists
In its investment outlook published in third-quarter 2016, Colliers International notes
that household consumption in Japan took a hit following the implementation of a
consumption tax hike in 2014, which occurred at the same time as a decline in crude-oil prices and a slowdown in the global economy.
Tourism in the country, however, is booming, according to Colliers, with the government expecting 40 million foreign visitors annually by 2020 — twice the number of
visitors to the country in 2015. Mizuho Research Institute Ltd. anticipates a shortage
of 44,000 hotel rooms in 2020 based on the existing number of rooms. Some real
estate companies’ strategies are emphasizing hotel assets, the Colliers report states.
The Japanese yen’s appreciation of more than 16 percent over the first three quarters
of last year negatively impacted manufacturing and export-driven sectors, according to the Colliers report. A more recent report from Cushman & Wakefield notes that
after the U.S. presidential election, the yen weakened rapidly, which, in the short term,
should bolster corporate earnings.
The Cushman & Wakefield report predicts that Tokyo’s office-vacancy rate will continue
its downward trend in 2017, to around 3 percent, creating upward pressure on rental
rates. Vacancy rates are expected to rise again in 2018, however, because of new office
supply scheduled to come online.
Japan saw positive gross domestic product (GDP) growth in each of the first three
quarters of 2016. The country’s modest third-quarter GDP growth rate in 2016 of
1.3 percent, however, was disappointing, according to the Cushman & Wakefield
report. Additionally, retail sales in the country declined, posting negative figures this
past October, the report states. n
By Steven Wyble
Japan’s GDP growth rate for
Japan’s unemployment rate as of
Japan’s year-over-year inflation
rate as of April 2017