Nagaland News Watch

Japan’s economy enters a recession and currently ranks fourth, behind Germany

<p>Japan’s economy shrank in the last quarter of 2023, lagging behind Germany to become the fourth biggest in the world.</p>
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<p>Based on real GDP figures from the Cabinet Office, the government estimated that the economy contracted at an annual pace of 0.4% from October to December 2023, although growing 1.9% overall. It shrank 2.9% from July to September. An economy is said to be in a technical recession if it has contracted for two quarters in a row.</p>
<p>Up until 2010, when China’s GDP surpassed Japan’s, it was the second biggest. Germany’s nominal GDP last year was USD 4.4 trillion, or USD 4.5 trillion, depending on the currency translation, whereas Japan’s was USD 4.2 trillion.</p>
<p>Since nominal GDP comparisons are made in terms of dollars, the decline to the fourth position was mostly caused by a lower Japanese yen. However, experts point out that Japan’s relative weakness also stems from a declining population as well as a country with inadequate productivity and competitiveness.</p>
<p>A country’s real gross domestic product is a gauge of the worth of its goods and services. The annual rate calculates the outcome of applying the quarterly rate to a one-year period.</p>
<p>Japan’s ascent from the ashes of World War II to become the second-biggest economy behind the US has long been hailed as “an economic miracle”. That continued until the 1970s and 1980s. The economy has, however, mostly remained in a state of stagnation for the last 30 years from the start of the financial bubble collapse in 1990, growing only little at periods.</p>
<p>Solid productivity from small and medium-sized firms drives the economies of Germany and Japan.</p>
<p>Similar to Japan throughout the 1960s and 1980s, Germany dominated international markets for high-end goods like industrial equipment and luxury vehicles for the majority of this century. It sold so much to other countries that exports accounted for half of its GDP.</p>
<p>However, its economy, which was among the weakest in the world last year, shrank by 0.3% in the most recent quarter.</p>
<p>The population of the island country, which has a low birth rate, has been declining and becoming older for years, while Germany’s population has increased to around 85 million due to immigration.</p>
<p>According to Tetsuji Okazaki, an economics professor at the University of Tokyo, the most recent figures reflect the reality of a weaker Japan and will probably lead to Japan commanding a reduced position in the globe.</p>
<p>For example, Japan had a strong car industry a few years ago. However, even that benefit is called into question by the introduction of electric cars, he said. Although there are still a lot of unanswered questions, “the outlook for Japan is dim when looking ahead to the next couple of decades.” The difference in nominal GDP between established and developing countries is closing, with India predicted to surpass Japan in the coming years.</p>
<p>With a GDP of USD 27.94 trillion in 2023 compared to USD 17.5 trillion in China, the US economy continues to be the greatest in the world. India’s economy, which is valued at USD 3.7 trillion, is expanding at an impressive pace of nearly 7%.</p>
<p>One solution to Japan’s labor shortfall is immigration, but apart from short-term stays, the nation has been mostly unaccepting of foreign workers, drawing accusations of discrimination and a lack of variety.</p>
<p>Another alternative, robotics, is being used more and more, albeit not to the point where it can completely compensate for the labor shortage.</p>
<p>Japan’s slow growth is mostly due to stagnate salaries, which have made families hesitant to make purchases. Simultaneously, companies have made significant investments in economies in rapid growth abroad rather than in the aging and contracting domestic market.</p>
<p>Last year, private consumption declined for three quarters in a row. According to Marcel Thieliant of Capital Economics, “growth is set to remain sluggish this year as the household savings rate has turned negative.” “Our forecast is that GDP growth will slow from 1.9% in 2023 to around 0.5% this year.”</p>