In this context, trade and outward investment have continued to play an important role in supporting economic activity and sustaining external balances, WTO noted in its sixteenth review of the country’s trade policies and practices.
Japan’s economic outlook remains positive in the near term, with real gross domestic product (GDP) projected to grow by 1.3 per cent in fiscal 2026-27, i.e., April 1, 2026, to March 31, 2027.
While Japan’s economy has shown resilience, its growth performance has remained modest, reflecting structural challenges and external factors, WTO has said.
Its near-term economic outlook is positive, with real GDP projected to grow by 1.3 per cent in FY27.
Key challenges in manufacturing include labour shortages, the need to accelerate digitalisation and the urgency to meet carbon neutrality targets.
Monetary policy normalisation, together with solid private sector activity, is expected to support economic conditions, although the outlook remains subject to global uncertainty and ongoing structural challenges, WTO observed.
In this context, trade will remain central to growth, both by securing essential imports and supporting exports, it said.
Japan retains comparative advantages in manufacturing exports. Yet, shifts in global competition and technology are placing pressure on these strengths and highlighting the need to broaden Japan’s sources of growth.
Expanding high-value services, developing new industries and diversifying markets and suppliers will be important to enhance resilience and support sustainable long-term growth, the review remarked.
Key challenges in manufacturing, which remains central to the economy, include persistent labour shortages, the need to accelerate digitalisation and the urgency to meet carbon neutrality targets.
These challenges are compounded by weak productivity growth and intensifying international competition in industries in which Japan traditionally has held a revealed comparative advantage, the review document added.
Fibre2Fashion News Desk (DS)
