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In 2022, Japan's economy faced many difficulties. Although the macro economy continues to maintain a recovery tone, the pace of recovery is relatively slow. The real GDP has not yet reached the pre-pandemic level. Affected by factors such as high global inflation and rapid depreciation of Japanese yen, domestic prices in Japan have significantly increased, exerting huge pressure on household consumption and corporate investment. Due to the rising import prices, there has been a sustained deficit in foreign trade and a significant reduction in current account profits. The employment situation has improved and nominal wage income has increased. However, the wage increase is lower than inflation. The Kishida government has been adjusting “Japanese neo-capitalism” economic policy, putting more emphasis on fully economic recovery and sustained economic growth, and focusing on increasing investment in green transformation, digital transformation, technological innovation and cultivating start-ups. Looking ahead, in the short term, with the normalization of economic activity and social life, there is a high possibility of a slow and sustained recovery of Japanese economy. However, the international political and economic situation poses great uncertainties on Japanese economy's recovery. In the medium to long term, the external economic environment is gradually improving, and the Japanese government is also making adaptive adjustments. However, the deep-seated structural problems of Japanese economy and society are difficult to solve. Opportunities and challenges are coexisting. Strengthening Sino-Japanese economic and trade cooperation is of special significance to Japan's economic recovery, as well as for the high-quality development of China's economy.

Keywords: Japan's Economy; Inflation; Foreign Trade; Yen Exchange Rate; Economic Policy