General Economic Background– Measured by purchasing power parity basis that adjusts for price differences, Japan stood as the fifth-largest economy in the world following the US., EU, China, and India in 2013. After change of administration by Liberal Democratic Party in December 26, 2012, Japanese Prime Minister Shinzo Abe established a “Three-Arrow; Aggressive monetary policy, Flexible fiscal policy, Growth strategy that promotes private investment” or “Abenomics” basic components of his economic policies. As a result, the Japanese economy has been broadly recovering in terms of the rise of stock price, weaker yen, and recovery of unemployment rate. Furthermore, the government implemented the economic stimulus package “Economic measures for Realization of Positive Cycles” complied by the FY2013 supplementary budget which worth $550 billion. Approximately $20 billion will be spent for public works possessing immediate stimulus upon the economy.
Japan’s real growth rate increased to +1.5 in 2013 from +1.4 in 2012 due to a surge in consumer spending in anticipation of a consumption tax hike from 5% to 8% in April 2014. Moreover, Tokyo was selected to host the 2020 Summer Olympics by the International Olympics Committee in September 2013. The Tokyo Metropolitan Government Office measures that the 2020 Summer Olympics will create economic effects worth about $30 billion all over Japan through spending directly related to holding the Olympics. In addition, it impacts wide range of fields including construction, tourism, PR events, and etc. The private-sector think-tank estimate that it generates 121,000-employment through the construction, retail sales, and service industry and it brings about $190 billion of economic ripple effect. It will lift the Japan’s GDP by 0.3 % every year.
Wood Products Trade Data – Japan’s wooden housing sector remains the second largest in the world, following the United States. This fast is particularly significant since the population of Japan is about 127 million; equal to about 42 percent the population of the U.S. As a result, Japan continues to be a major consumer of wood construction materials and furniture. The residential housing sector accounts for an estimated 85% of wood use in Japan, and this percentage approaches 90% if wood used in all forms of construction is included. This critical construction market segment therefore dominates the wood products trade performance. Housing starts increased by 11.2% in 2013.
Strengths: Historical softwood supplier; proximity of US west coast producers to Japan; high quality/consistency of US wood products; sustainable supply, market demand for US species like Douglas fir.
Weaknesses: US sawmills’ focus on domestic market; Some US sawmills’ inability to cut sizes required by Japanese market
Opportunities: Diverse/high-value market segments such as DIY, Post and Beam traditional style houses, increasing remodeling/renovation, etc.; decreased interest in Canadian SPF because of blue stain from Japanese end users and importers
Threats: Less expensive wood from other countries (Russia, Europe Canada, New Zealand);devaluation of the Yen, countries with a greater export focus, Structural softwood products produced in Japan from US log sources
SEC maintains an office in Japan (http://www.americansoftwoods.jp/) to assist members in their export efforts.