Togzhan Yerzhankyzy | 28.09.2025
Japan’s Economic Transformation
The Japanese economy is one of the world's leading economies in the 21st century. Japan is well known for its high technology, high-quality medicine and for its impact on the world. In 2019, Japan welcomed a record 31.9 million international tourists, generating about $46 billion USD in spending. The country also exported goods worth approximately $745 billion USD: mainly automobiles, electronics, and industrial machinery, which positively affected the country's economic state in 2024. Many countries strive to have a strong economy like Japan, but it has not always been a leader in the economy. There were times when the country struggled.
Yet, the country began to improve. The Korean War (1950–1953) played a huge role in Japan's economic recovery. The United States used Japan as its main supply base. The country received huge orders for weapons, vehicles, uniforms, medicine, and food. This immediately revitalised factories and people. The country once again had hope for a good future. Between 1946 and 1973, real GNP expanded by nearly 10% per year, making Japan the fastest-growing advanced economy in the world. In 1970, Japan was on the list of the fastest-growing countries, as the price of imported petroleum soared, labour costs increased, and the value of the national currency, the yen, rose against foreign currencies.
The most important of them is the demographic crisis, which in turn translates into Japan's economic crisis. Almost 30% of the population is over 65 years old, and the birth rate is at a record low (fewer than 700 thousand newborns in 2024). The declining numbers of young people in the labour force have led to a shortage of workers in manufacturing, and the ageing of the workforce has provoked a decline in production and innovation; therefore, there is a drop in Japan's manufacturing exports as a share of global exports. Today, the country's economy is stable and still strong, but demographic problems are showing their impact. The country is in the process of solving these problems.
The country's nature also attracts a lot of attention. Many people dream of visiting its magical places. The country has a lot of income, especially in the spring during the cherry blossom season. During this period, millions of tourists fly in to see the blossoms with their own eyes.
However, during the pandemic, the number of tourists rapidly decreased, which affected the country's economy at that time. Small businesses dependent on tourists (souvenir shops, cafes, regional hotels) faced significant losses.
Now the country's economy is gradually improving. An example of this is Expo 2025, which is taking place in Osaka. Japan has once again found itself in the global spotlight, cementing its status as a high-tech and innovative power. The expo served as a platform for presenting developments in robotics, future medicine, green energy, and sustainable development.
Japan is a strong country that has been through a lot. The country has advanced from the devastation of World War II to the unprecedented recovery of the postwar “economic miracle.” Now, despite the problems, it maintains its strength in the global economy. It serves as a powerful example for developing nations, showing how a country can transform the ruins of its past into a country of advanced technology, world-class healthcare, and high-quality education.
During World War II
Japan's factories were dedicated to producing goods suitable for war: 9 tons of steel for weapons, tanks, and 10,000 aircraft for the military per year. The focus on producing goods suitable for the war had a positive impact on the country's economy at that time. As time passed, Japan developed a highly diversified economy in which the service sector, including finance, retail, and tourism, came to dominate both employment and GDP. However, Japan had no oil, metal, or rubber reserves of its own and was heavily dependent on captured territories. With the blockade imposed by the US and Great Britain, access to raw materials was cut off. Without resources, the country could not sustain military production or supply the army. The country maintained its wealth only by producing and selling automobiles and technology.Economic Miracle: Post-War Recovery
After World War II, Japan’s economy was destroyed. Cities, factories, and infrastructure had been bombed, most businesses closed, so the country was extremely poor, and unemployment reached record levels. The bombings destroyed up to 40% of urban areas, factories, and transport. Industrial production fell by almost 70% compared to pre-war levels.Yet, the country began to improve. The Korean War (1950–1953) played a huge role in Japan's economic recovery. The United States used Japan as its main supply base. The country received huge orders for weapons, vehicles, uniforms, medicine, and food. This immediately revitalised factories and people. The country once again had hope for a good future. Between 1946 and 1973, real GNP expanded by nearly 10% per year, making Japan the fastest-growing advanced economy in the world. In 1970, Japan was on the list of the fastest-growing countries, as the price of imported petroleum soared, labour costs increased, and the value of the national currency, the yen, rose against foreign currencies.
Beginning of the 21st century
The population also had a significant impact on the economy. In 2000, the population peaked at around 127 million, but then began to decline. Meanwhile, the proportion of elderly people grew rapidly. Due to the large number of elderly people, the state had to pay higher pensions. However, at the same time, Japan experienced modest growth driven by exports, particularly automobiles, electronics, and high technology. Products like Toyota, Sony, and Panasonic are currently considered global giants. However, domestic problems persisted: insufficient inflation, sometimes even deflation, high public debt, and weak domestic demand. Thus, Japan's economy in the 2000s combined strengths and weaknesses. Its strengths were exports and high technology, while its weaknesses were a demographic crisis, high dependence on foreign markets, and massive public debt.Japan’s Economy Today
Nowadays, the Japanese economy remains as strong today as it has been in the past. Currently, the country ranks third in terms of economic strength. It leads in robotics, automation, healthcare, and high-tech manufacturing. Furthermore, the "longevity economy", products and services for the elderly, is becoming a new source of growth. But there are also problems that the country is struggling with.The most important of them is the demographic crisis, which in turn translates into Japan's economic crisis. Almost 30% of the population is over 65 years old, and the birth rate is at a record low (fewer than 700 thousand newborns in 2024). The declining numbers of young people in the labour force have led to a shortage of workers in manufacturing, and the ageing of the workforce has provoked a decline in production and innovation; therefore, there is a drop in Japan's manufacturing exports as a share of global exports. Today, the country's economy is stable and still strong, but demographic problems are showing their impact. The country is in the process of solving these problems.
Tourism
Japan has always been popular among tourists. Thanks to its rich culture, Japan is visited by 32 million tourists annually. The huge number of tourists promotes the hotel business, transportation, restaurants, trade and especially local regions, which receive additional income from visitors. Tourists are very interested in historical and cultural sites such as temples, museums, and historical parks.The country's nature also attracts a lot of attention. Many people dream of visiting its magical places. The country has a lot of income, especially in the spring during the cherry blossom season. During this period, millions of tourists fly in to see the blossoms with their own eyes.
However, during the pandemic, the number of tourists rapidly decreased, which affected the country's economy at that time. Small businesses dependent on tourists (souvenir shops, cafes, regional hotels) faced significant losses.
Now the country's economy is gradually improving. An example of this is Expo 2025, which is taking place in Osaka. Japan has once again found itself in the global spotlight, cementing its status as a high-tech and innovative power. The expo served as a platform for presenting developments in robotics, future medicine, green energy, and sustainable development.
Japan is a strong country that has been through a lot. The country has advanced from the devastation of World War II to the unprecedented recovery of the postwar “economic miracle.” Now, despite the problems, it maintains its strength in the global economy. It serves as a powerful example for developing nations, showing how a country can transform the ruins of its past into a country of advanced technology, world-class healthcare, and high-quality education.
