The much smaller agricultural sector is highly subsidized and protected, with crop yields among the highest in the world. Growth slowed markedly in 1992-95 largely because of the aftereffects of overinvestment during the late 1980s and contractionary domestic policies intended to wring speculative excesses from the stock and real estate markets. But in 1997-98 Japan experienced a wrenching recession, centered about financial difficulties in the banking system and real estate markets and exacerbated by rigidities in corporate structures and labor markets. In early 1999 output has started to stabilize as emergency government spending begins to take hold. The crowding of habitable land area and the aging of the population are two major long-run problems.
Japan is the second largest economy in the world after the United States.
Its reservoir of industrial leadership and technicians, well-educated and industrious work force, high savings and investment rates, and intensive promotion of industrial development and foreign trade have produced a mature industrial economy. Along with North America and Western Europe, Japan is one of the three major industrial complexes among the market economies. Japan has few natural resources, and trade helps it earn the foreign exchange needed to purchase raw materials for its economy. The impact of the Asian financial crisis has also been substantial. Real GDP in Japan grew at an average of roughly 1.25 percent yearly between 1991-98, compared to growth in the 1980s of about 4 percent per year.