On April 2, 2026, the IMF (International Monetary Fund) released a report about Japan. They praised Japan’s economic resilience (strength). Even though the world economy is facing many problems, the IMF still predicts that Japan’s GDP will grow by 0.8% in 2026. The IMF also found that private spending in Japan did not drop as much as expected. This is because Real Wages (salaries after inflation) are rising. Companies have to increase pay to attract people because of the labor shortage.

Ryosei Akazawa, the Minister of Commerce, told The Japan Times that the BOJ (Bank of Japan) might raise interest rates on April 28, 2026. This is to fight Stagflation because oil prices have hit $100 per barrel. Financial markets believe there is a 60% chance that the BOJ will raise the rates.

In the last 5 years after COVID-19, Japan’s economy has recovered slowly with an average GDP growth of 1.38% per year. However, the economy slowed down in 2024 because Japan changed its policy to control inflation. Also, Japan lost its position as the 3rd largest economy to Germany. The main reason was the weak Yen compared to the US Dollar. Meanwhile, Germany had higher inflation, which made its Nominal GDP look higher. Japan is now trying to change its economic structure by investing in Semiconductors and Green Technology. For example, the government is supporting the Rapidus project to develop advanced 2nm chips.

But did you know that Japan focuses more on GNP (Gross National Product)? This counts the wealth of all citizens, no matter where they work in the world. This is different from GDP, which only counts activities inside the country. If we only look at GDP, we might be confused about Japan's real wealth. We must look at GNP because Japanese companies invest a lot in other countries. They get a lot of dividends and profits sent back home. This is different from Thailand, which relies mostly on FDI (Foreign Direct Investment) from other countries.

Nowadays, the World Bank and IMF usually use GNI (Gross National Income) instead of GNP for better accuracy. GNI focuses on "Income" rather than "Product." It includes salaries, income from properties (interest and dividends), and taxes. This helps the World Bank categorize countries by income level. GNI shows if the people are actually getting richer or poorer. In some countries, GDP is very high because of foreign factories, but the GNI is low because the profits are sent out of the country.

Comparison of Japan's GDP and GNI (Trillion Yen) 

These numbers are in Trillion Yen to show real growth without currency changes

In the last 5 years, the weak Yen has actually helped GNI. When Japanese global companies bring their profits (in Dollars or Euros) back to Japan and exchange them for Yen, the value becomes higher. The increasing gap between GDP and GNI shows that Japan is changing from a Trade-based country to an investment-based country. If we only look at GDP, we think Japan is growing slowly. But if we look at GNI, we see that Japan is still very wealthy as an "owner of production" with income from all over the world.

Finally, we must look at the Cost of Living. In the last 5 years

2021 Inflation was -0.2% (The last year of cheap prices).

2022-2023 Inflation rose to 3% because of high energy prices and the weak Yen.

2024-2025 Inflation stayed around 2.7%. Food and daily goods became very expensive. (Average household spending rose from 70,000 yen to 90,000 yen).

2026 The BOJ wants to keep inflation at 2.0%.

This situation created a problem "Prices went up, but salaries stayed the same." This made Real Wages stay negative for many months. However, in early 2026, Real Wages finally became positive (+1.4% to 1.9%) for the first time in years. This is because big companies raised salaries at the highest rate in 34 years to keep their workers. Economists believe Japan has finally escaped the "Deflation Trap." Now, the government just needs to make sure that wages grow faster than the price of goods.

References

Akazawa, R. (2026, April 12). BOJ policy to boost yen could be an option to curb inflation. The Japan Times. Retrieved from https://www.japantimes.co.jp/business/2026/04/12/economy/akazawa-boj-policy-inflation/

Cabinet Office of Japan (CAO). (2025). National Accounts Statistics 2024-2025. Government of Japan.

International Monetary Fund (IMF). (2026, April 2). Japan: 2026 Article IV Consultation - Press Release; Staff Report; and Statement by the Executive Director for Japan. Retrieved from https://www.imf.org/en/publications/cr/issues/2026/04/02/japan-2026-article-iv-consultation-press-release-staff-report-and-statement-by-the-575112

International Monetary Fund (IMF). (2026, April). World Economic Outlook: Japan Data Profile.

Mankiw, N. G. (2021). Principles of Economics (9th ed.). Cengage Learning.

Ministry of Finance (MOF). (2026). Balance of Payments Statistics: Primary Income. Government of Japan.

Ministry of Health, Labour and Welfare (MHLW). (2026). Monthly Labour Survey. Retrieved from https://www.mhlw.go.jp/english/database/db-l/index.html

Ministry of Internal Affairs and Communications (MIC). (2026). Consumer Price Index (CPI). Retrieved from https://www.stat.go.jp/english/data/cpi/index.html

The Japan Times. (2026, April 8). Japan's real wages rise most since 2021. The Japan Times. Retrieved from https://www.japantimes.co.jp/business/2026/04/08/companies/japan-real-wages-rise/

Trading Economics. (2026). Japan Food Inflation Report. Retrieved from https://tradingeconomics.com/japan/food-inflation

Trading Economics. (2026). Japan Inflation Rate (CPI). Retrieved from https://tradingeconomics.com/japan/inflation-cpi

United Nations. (2008). System of National Accounts 2008 (SNA). New York: United Nations.

World Bank. (2024). GNI, Atlas method (current US$). World Bank Open Data