Recent Developments of the Japanese Economy Seen from the National Accounts(in Japanese)

1.Motivation In the estimation of the national accounts of the Japanese economy for FY2004, we have conducted both an annual and a benchmark revision of every five years to enhance the accuracy of the estimates. Based on the revised data, this report has clarified and analyzed recent remarkable changes of the Japanese economy, namely household savings ratio, fiscal balance, rest of the world accounts, international comparison of the nominal per-capita GDP, and GDP component deflators. One purpose of this report is to shed light on the recent developments of the Japanese economy through these analyses. 2.Approach The analyses reported here mainly depend on the data of main accounts and supporting tables of the annual report on national accounts 2006, complementarily on related individual primary data such as family income and expenditure survey, government-activity generated data, etc. We have analyzed overall trends of the Japanese economy and subjects stated above by fully using both kinds of data. 3.Conclusions By the last benchmark revision, the household savings ratio of Japan has been revised sharply downward, especially since FY2000, reaching a record low of 2.7 percent in FY2004. This change is mainly because of the upward revision of the private consumption expenditures other than imputed rents of owned houses, and of the downward revision of the compensation of employees. As for the recent sharp drop, it is supposed to be attributed much more to the factors of aging than to the revisions. The household savings ratio is expected to follow inevitably a long-term declining trend caused by the continuing aging of Japan's demographics. The fiscal balance (net lending (+) /net borrowing (-)) of the general government deteriorated rapidly after the burst of the bubble. The fiscal deficit excluding special factors kept expanding until FY2003. However, it decreased sharply in FY2004. The deterioration of the fiscal balance in the 1990s was caused by the shrinking of tax revenues and the increase in government consumption and fixed capital formation with net purchase of land. In addition to these factors, it was attributed to the expansion of the difference between benefits and contributions of social security. As for the improvement of fiscal balance in FY2004, the increase in tax revenue and the reduction in fixed capital formation with net purchase of land contributed to it. In recent years, the net income (interest, dividends, etc.) of Japan from the rest of the world has increased greatly against the background of the accumulation of net external assets. It is supposed that the net income from the rest of the world exceeded the net exports of goods for the first time in 2005. The difference between GNI (gross national income) and GDP (gross domestic product) in nominal terms has expanded because of the increase in net income from the rest of the world. On the other hand, this difference in real terms has narrowed. It is because the 'trade losses' have expanded, reflecting the deterioration of terms of trade by the sharp rise in crude oil prices, although the net income from the rest of the world has increased. In comparison to the nominal per-capita GDP of OECD countries based on revised SNA data and those of the OECD, it is remarkable that Japan and Germany lost ground on the one hand, yet Ireland and Iceland advanced rapidly on the other. This can be seen not only denominated in nominal exchange rates but also in purchasing power parities. The rapid advance of the small-economy countries of Europe is supposed to be attributed to the market-integration of EU countries, which has created a large market for exports, in addition to successes of their structural reforms.