Japan's economy is in recession: the complex truth behind the numbers
Recently, the recession of the Japanese economy has attracted widespread attention. This is despite official figures showing that GDP grew by 19%, but when converted into dollars, it drops to 421 trillion, losing its status as the world's third economy, was overtaken by Germany. Why is economic growth considered to be in recession?
Western economists measure a recession not by annual GDP, but by the quarter-on-quarter growth rate of GDP. According to the latest data, Japan's GDP in the fourth quarter of 2023 came at an annual rate of minus 0.4%, two consecutive quarters**, so it's officially in recession. The news is not isolated, as the UK is also in recession.
Germany, although it came close to falling into recession at the same time, compares it to Japan in nominal terms of GDP rather than growth rates. Since nominal GDP is more susceptible to market volatility, inflation in Germany is higher than in Japan, which takes advantage of the comparison. The depreciation of the yen has led to a further contraction of GDP in US dollar terms.
The Bank of Japan's moves, which did not follow other countries' interest rate hikes, led to the depreciation of the yen, even falling below 150. This is seen as a takeover for the United States, which in turn affects the GDP ranking. Is this a long-term trend?
Japan's negative growth can be seen as a long-term phenomenon. From 5 in 202101 trillion dollars fell to 4. in 202223 trillion, and then to last year's 421 trillion, for two consecutive years**. There have been many fluctuations in GDP history, reaching 5$55 trillion in 1998 ** to 4$1 trillion, which reached $6 in 2012 after the subprime mortgage crisis27 trillion, down to 4 in 201544 trillion.
Is the recent decline in GDP due to the depreciation of the yen? It is worth noting that Japan has continued to ** US bonds in the last three months, reaching $51.8 billion, resulting in the yen exchange rate**. This raises the question of whether Japan is once again prepared to pay for the United States.
Please give some support to this article on ** issue, thank you for reading and liking!
The above content information is ** on the Internet, if there is any infringement and other issues, please contact the author!