What is the economic and political environment for doing business in Japan?

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September 2015

Australia has a very strong relationship with Japan, and the size and proximity of the Japanese market makes it a promising destination for Australian SMEs.

Export relationship

  • Japan is our second largest export destination and trading partner
  • Australian exports to Japan were worth US$50 billion in 2014
  • Australian investment in Japan was worth A$70 billion in 2014, which is equivalent to four per cent of Australia’s foreign investment portfolio
  • Japan is Australia's fourth-largest investor, with an investment worth around A$175 billion at the end of 2014

Economic climate

  • Japan is the world’s third largest economy after the US and China
  • Japan is a highly industrialised market economy with a very high per-capita income and a well-educated workforce
  • However, economic growth is weak compared to its advanced economy peers, with growth averaging less than one per cent over the last two decades
  • The fallout from Japan’s asset price bubble in the late 1980s, a declining population, weak productivity and greater competition from other high tech manufacturers have weighed on GDP growth
  • Japan’s Prime Minister has ramped up fiscal stimulus and delivered unprecedented monetary easing in an attempt to end deflation and lift growth


Political climate

  • The World Bank ranks Japan in the top quartile in all areas of governance
  • A free trade agreement between Australia and Japan entered into force in January 2015
  • The agreement will allow more than 97 of Australian exports preferential treatment or duty free access into Japanese markets


Find out more

Find more detailed information about Japan’s economic and political climate here.

64 per cent [of Australian international businesses] expect business in Japan to get better, pointing to a generally positive outlook on the country – Australian International Business Survey 2015.