The economy of Japan is the second largest economy in the world. after the United States at around $5 trillion USD in terms of nominal GDP and third after the United States and People's Republic of China when adjusted for purchasing power parity. The workers of Japan rank 18th in the world in GDP per hour worked as of 2006. The Big Mac Index shows that the wages in Tokyo are the highest among principal cities in the world.

For three decades, Japan's overall real economic growth had been high: a 10% average in the 1960s, a 5% average in the 1970s and a 4% average in the 1980s. Sliding stock and real estate prices marked the end of the "Japanese asset price bubble" of the late 1980s, and ushered in a decade of stagnant economic growth. These problems may have been exacerbated by domestic policies intended to wring speculative excesses from the stock and real estate markets. Real GDP in Japan grew at an average of roughly 1.5% yearly between 1991-1999, compared to growth in the 1980s of about 4% per year. Growth in Japan throughout the 1990s was slower than growth in other major industrial nations, and the same as in France and Germany. Government efforts to revive economic growth have met with little success and were further hampered in 2000 to 2001 by the slowing of the global economy. However, GDP per worker has increased steadily even through the nineties, growing at 2.0% per year in 2003 and 2004, and 2.8 percent in 2005. In 2008, due to the global financial crisis, the economy of Japan was strongly hit and shrank 0.7% and is expected to shrink some 5% in 2009.

A mountainous, volcanic island country, Japan has inadequate natural resources to support its growing economy and large population. Although many kinds of minerals were extracted throughout the country, most mineral resources had to be imported in the postwar era. Local deposits of metal-bearing ores were difficult to process because they were low grade. The nation's large and varied forest resources, which covered 70 percent of the country in the late 1980s, were not utilized extensively. Because of the terrain, underdeveloped road network, and high percentage of young trees, domestic sources were only able to supply between 25 and 30 percent of the nation's timber needs. Agriculture and fishing were the best developed resources, but only through years of painstaking investment and toil. The nation therefore built up the manufacturing and processing industries to convert raw materials imported from abroad. This strategy of economic development necessitated the establishment of a strong economic infrastructure to provide the needed energy, transportation, communications, and technological know-how.

Deposits of gold, magnesium, and silver meet current industrial demands, but Japan is dependent on foreign sources for many of the minerals essential to modern industry. Iron ore, copper, and bauxite must be imported, as well as many forest products.

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