Medium-term outlook for Japanese industry


Mizuho Industry Research
December 8, 2022

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Mizuho Industry Research, Japan has compiled a report providing a five-year outlook on the Japanese economy – the supply and demand trends from 2023 up to 2027 in each industry, and their implications for Japanese companies.

Industries covered:

  • Industry overview
  • Chemicals
  • Oil
  • Logistics
  • Electric power
  • City gas
  • Healthcare
  • Nursing care

 

Key Highlights

1. Business environment

  • From 2024 onwards, structural changes such as Japan’s shrinking population and sluggish exports of key industries will fully surface.
  • In particular, the materials and automotive industries will be forced to adopt game-changing measures, such as decarbonization and switching to EVs, amid slashing of production levels due to declines in both domestic demand and exports.
  • For electronics and IT-related industries, the market is projected to grow steadily with the continuing shift toward digitalization, but this will also mean intensifying competition from outside Japan.
  • While the energy sector’s current top priority is ensuring stable supply and imports, it is also being pressed to make fundamental changes geared toward carbon neutrality.
  • The domestic demand-based consumer and social infrastructure industries will see further downward pressure on demand due to population decline, and labor shortages in sectors such as construction and logistics will become increasingly serious.

 

2. Medium-term challenges

  • Japanese industry will face four key structural challenges as a result of changes in the business environment over the next few years.
     
  1. A drop in domestic production in response to shrinking domestic and export demands
  2. Supply constraints (including those attributable to key inputs such as raw materials and labor)
  3. Intensifying global competition with the advance of digitalization
  4. Moves toward carbon neutrality and resulting opportunities and threats

 

3. Way forward over the next several years

  • Japanese industry will need to pursue structural transformation, growth strategies, and business model changes from a medium- to long-term perspective.
     
  1. Structural transformation: (1) Rescaling production, (2) Diversifying energy sources, (3) Streamlining supply chains
  2. Growth strategies: (1) Foreign direct investment, (2) Increasing domestic production capacity for key products
  3. Business model changes: (1) Leveraging intangible assets to improve profitability of the service industry, (2) Shift to solution-based manufacturing, (3) Generating new demand through R&D and innovation
 
 
Disclaimer
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