Japan is the third largest national economy in the world, after the United States and China, in terms of nominal GDP, and the fourth largest national economy in the world, after the United States, China and India, in terms of purchasing power parity. Japan’s public debt was more than 200 percent of its annual gross domestic product, the second largest of any nation in the world. Moody’s rating has cut Japan’s long-term sovereign debt rating one notch from Aa3 to Aa2 inline with the size of the country’s deficit and borrowing level. The large budget deficits and government debt since the global recession and followed by earthquake and tsunami made the rating downgrade. The service sector accounts for three quarters of the gross domestic product.
Tokyo has the largest metropolitan economy in the world. According to a study conducted by PricewaterhouseCoopers, the Tokyo urban area (35.2 million people) has a total GDP of US$2.91 trillion. 51 of the companies listed on the Global 500 are based in Tokyo, almost twice that of the second-placed city (Paris). Tokyo is a major international finance center, houses the headquarters of several of the world’s largest investment banks and insurance companies, and serves as a hub for Japan’s transportation, publishing, and broadcasting industries. Tokyo was rated by the Economist Intelligence Unit as the most expensive (highest cost-of-living) city in the world for 14 years in a row. This analysis is for living a corporate executive lifestyle, with items like a detached house and several automobiles. Tokyo has been described as one of the three “command centers” for the world economy, along with New York City and London. The Tokyo Stock Exchange is Japan’s largest stock exchange, and third largest in the world by market capitalization and fourth largest by share turnover. At the end of the Japanese asset price bubble, it accounted for more than 60% of the world stock market value.