Japan s nominal GDP was overtaken by Germany, and the stock market continued to soar

Mondo Finance Updated on 2024-02-16

In 2010, Japan's nominal gross domestic product (GDP) was surpassed by China for the first time, and 13 years later, Japan's nominal GDP was surpassed by Germany, falling to fourth place in the world.

According to the latest preliminary statistics released by the Cabinet Office, Japan's nominal gross domestic product (GDP) in 2023 will be 42106 trillion US dollars, a year-on-year increase of 57%, real GDP increased by 19%。

Data released by the German Federal Statistical Office in mid-January showed that Germany's total nominal GDP in 2023 will be about 45 trillion US dollars, an increase of about 65%。

The breakdown data released during the same period also showed that in the fourth quarter of 2023, Japan's real GDP fell by 01%, which translates to a decrease of 04%, two consecutive quarters of negative growth, means that the Japanese economy has officially fallen into a structural recession.

However, it is worth noting that the relevant economic data released by Japan** did not drag down Japan**. As of the time of the first financial press release, the carnival of Japan's ** is still continuing. On the 16th, the Nikkei 225 index closed up 086% at 3848724 points, intraday high to 3886506 points, a new high since January 1990.

Is it all the exchange rate to blame?

The International Monetary Fund (IMF) also projected in December last year that Japan's nominal GDP in 2023 would be 4$23 trillion, compared to Germany's nominal GDP of $4$43 trillion.

Past data show that in 1968, Japan's total GDP was close to 150 billion US dollars, accounting for nearly 6% of the global total. That year, Japan surpassed the Federal Republic of Germany to become the world's second-largest economic power, after the United States. In the following 30 years, Japan's economy ushered in a period of development. In 1978, Japan's GDP crossed the $1 trillion mark. In that year, the total global GDP was 8At 6 trillion US dollars, Japan's share of the global economy has increased to about 12%. In 1995, Japan's economy reached its peak, with a total GDP of 55 trillion US dollars, accounting for 18% of the global share; The United States that year was 76 trillion dollars. In 2012, Japan's economy reached another peak, with a GDP of more than 62 trillion US dollars, accounting for 834%。

Since then, Japan's GDP has fallen at an unexpected pace. In 2021, Japan's GDP fell below $5 trillion, falling to 4$93 trillion. Since then, Japan's nominal GDP has hovered around $4 trillion as Japan's domestic economy fluctuates and the yen weakens. After being overtaken by China in 2010, Japan's economy will be the third largest in the world until 2024.

This change is believed to be inextricably linked to the recent volatility of the yen. In January 2022, the exchange rate of the Japanese yen was 115 yen per dollar. In December 2023, the yen exchange rate is 150 yen per dollar, and in two years, the yen has depreciated by 24%. Currently, the yen is hovering around the 150 mark against the dollar, a stone's throw away from a 33-year lowThe yen-dollar pair hovered near 160, the last time the euro touched the yen mark was in August 2008.

Chen Zilei, director of the Japanese Economic Center of Shanghai University of International Business and Economics, told Yicai that the main reason for the fluctuation of the yen is caused by the difference in monetary policy between central banks: in the past few years, the Federal Reserve and the European Central Bank have chosen to raise interest rates sharply to deal with inflation, while the Bank of Japan has maintained an accommodative mode, hoping to promote price growth after years of deflation. ”

Closely related to the fluctuation of the yen's exchange rate is also a new high in Japan**. According to the latest survey report of listed companies by Japanese media, the net profit of listed companies in Japan in 2023 hit a record high, an increase of 13% from 2022 to 435 trillion yen (about 2.)08 trillion RMB). Chen Yan, executive director of the Japan Enterprise (China) Research Institute, explained to reporters: "These Japanese listed companies have a common characteristic, that is, they actively invest overseas and have a high proportion of internationalization. This is especially true for trading companies in Japan. Therefore, relying on exchange rate changes can increase the efficiency of enterprises, which is more of a problem with foreign exchange algorithms. It remains to be seen whether the profitability of companies will actually improve. ”

However, the interviewees all stressed to Yicai that it is inappropriate to blame the change in the global ranking of Japan's GDP on exchange rate fluctuations. For example, the yen exchange rate increased from 107 in 200077 yen to 1 dollar, up to 79 in 201279 yen, after which it slipped to 131 in 202250 yen. "The yen exchange rate is changing, but the trend of Japan's economy as a share of the world's economy is declining," he said. For example, 2012 was the year when the yen exchange rate was the highest, and Japan's GDP was 627 trillion dollars, or 834%。The total size is higher than in 2022, but 15Compared with the proportion of 45%, it is close to halving, and the weakening trend is very obvious. ”

Chen Zilei also said that if Japanese inflation is taken into account, the real growth rate of the Japanese economy has not changed much, "The Nikkei index is mainly large companies, and the performance reflects more of the situation of large companies." In the absence of an increase in the overall size of the Japanese economy, the distribution plan is actually in favor of large enterprises and capitalists, which leads to the 'Matthew effect' of the strong and the strong."

2026 or overtaken by India?

After "losing" out of the world's third-largest economy, Japan** hopes to catch up. Kishida** has positioned the next three years or so as a "period of change" and said that he will focus on achieving consecutive salary increases and expanding capital investment. At the same time, it is supplemented by preferential tax policies for specific industries to reduce the burden on people and enterprises.

Toshihiro Nagahama, a senior economic analyst at Japan's Daiichi Life Economic Research Institute, said that the depreciation of the yen has increased the earnings of Japan's large multinational enterprises, but the income abroad is not included in Japan's gross domestic product; However, more small and medium-sized enterprises in Japan continue to face difficulties in their operations due to raw materials** and lack of manpower.

Chen Zilei believes that one of the troikas driving Japan's economic development is personal consumption, and whether it can get out of the predicament depends on factors such as corporate wage increases and growth expectations, "What needs to be worried about at present is whether the Matthew effect is stronger under the framework of 'new capitalism' advocated by Kishida**, whether the gap between Japan's small and medium-sized enterprises and large enterprises will be further widened, and whether the survival of low- and middle-income people will be more difficult, etc., it remains to be seen." ”

In the collective labor negotiations last spring, the salary increase of Japanese companies was the highest in the past 30 years, with a median salary increase of 38%。This year's "spring fight" is imminent. According to a new survey of Haruto, more Japanese companies plan to raise their base wages this year than last year, and wage increases are likely to be higher than last year. Nomura** even expects a 3.5 percent increase in Harumo's wages this year9%, and it is not excluded that it is expected to reach 4% to 45%. However, in order to achieve the real wages that Kishida has been calling for to keep up with or even exceed prices, how to raise wages for Japanese small and medium-sized enterprises, which account for about 70% of all employees, is the key to achieving the goal.

The latest data showed that in the fourth quarter of last year, personal consumption, which accounts for more than half of the Japanese economy, fell by 02%, enterprise equipment investment decreased by 01%, all of which have been negative for three consecutive quarters; Residential investment fell by 10%, down for two consecutive quarters; Exports of goods and services increased by 26%, three consecutive quarters of growth.

Chen Zilei believes that it remains to be seen whether the equipment investment of Japanese enterprises in the future can effectively connect with the development of emerging industries and innovative consumption patterns. In his view, the "ray of hope" for Japan's economic growth lies in leading investment, consumption, and exports with new industries, and at the same time being wary of the decline in domestic demand in an aging society with a declining birthrate.

Chen Yan believes that Japan has experienced more than 40 years of economic growth since the 60s of the last century, mainly driven by technological innovation, "because the technological revolution and business revolution have stimulated the growth of Japan's economy." But today, the scale of Japan's technological revolution is not comparable to that of more than 40 years ago. ”

Combined with IMF expectations, if Japan** is weak in real economic reform, Japan's nominal GDP ranking is likely to decline further between 2026 and 2028, for example, India may replace Japan as the world's fourth largest economy in 2026.

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