Japan's GDP fell for two consecutive quarters at the end of 2023, causing the country to fall into recession and lose its position as the world's third largest economy.
Official figures released on the morning of February 15 showed that Japan's GDP will increase by 1.9% in 2023, to $4.2 trillion. However, this figure is lower than Germany's, with $4.5 trillion, causing Japan to lose its position as the world's third largest economy to the European country.
Japan's GDP in the fourth quarter of 2023 also fell 0.1% compared to the previous quarter. This is the second consecutive quarter of negative growth for the country. In theory, they have fallen into recession.
Personal consumption, which accounts for more than half of GDP, fell 0.2% in the fourth quarter from the previous quarter. Capital spending, a key driver of the private sector, fell 0.1%.
People shop at a store in Tokyo (Japan). Photo: Reuters
Japan's GDP decline was largely due to the sharp depreciation of the yen against the US dollar. The currency has lost nearly 20% of its value against the US dollar in the past two years.
Part of the reason for the yen's weakness is that the Bank of Japan (BOJ) has maintained a negative interest rate policy, contrary to the wave of interest rate hikes by other major economies in the world to curb inflation. This has caused investors to leave the yen and look for other channels with higher returns.
Japan's economy relies heavily on exports, especially cars. A weak yen benefits exporters. However, the country is facing a labor shortage due to a declining population and low birth rate.
Japan became the world's second largest economy, after the United States, in the late 1960s. During the boom of the 1970s and 1980s, it was predicted to become the number one economy.
However, the bursting of the asset price bubble in the early 1990s plunged the country into a “lost era,” resulting in economic stagnation and deflation for the past several decades. By 2010, Japan had lost its position as the world’s second largest economy to China.
With the yen expected to continue to fall, the pressure will only increase on Prime Minister Fumio Kishida, who announced a 17 trillion yen ($118.5 billion) stimulus package in November 2023.
Ha Thu (according to AFP, Reuters)
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