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Japan slips into recession, becoming 4th-largest economy, behind U.S., China and Germany

67 Comments
By YURI KAGEYAMA

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I really hope this is not an excuse not to raise wages like we keep hearing are necessary to pull the economy out of years of stagnation!

24 ( +29 / -5 )

Just heard an "expert" on this subject say on the news that in terms of yen base, we are actually producing more than prior years, but considering this GDP measurement is in USD, we appear to have dropped due to the fact that the yen has been depreciated against the dollar. So nothing to worry about.

In other words, devaluing the yen has given exporting companies record profits, imports have driven prices up for average consumer in Japan, Japanese are now worried about future so they allocate their small savings towards NISA propping up the economy again, all the money printing that happened from 2020 onwards used to buy up company stocks and artificially growing the market, all the loans given out after the pandemic not being paid back due to lack of purchasing power, and the growing aging work force not producing enough despite putting in many hours, yeah, nothing to worry about at all...

Meanwhile LDP going on a spending spree books with out tax money. PLEASE can we get a more competent government? Rant over lol

20 ( +28 / -8 )

Japan has done badly in many sectors and things will get worse, but what has happened these past years is not really that profits has gone down, it's just that the profits are more and more going to those with already big pockets. The weak yen favors global companies, they are able to pay less for the same workforce while getting paid more for those products and services in other countries, while the negatives of a weak yen are put on the average consumer through higher prices.

Like many other countries money is just moving up the ladder further and further until you have a super rich 0.001% while the other 99% are struggling or just scraping by.

19 ( +22 / -3 )

The population shrank by 0.4%, so that's steady per capita. But GDP per capita declining is worrisome.

The remaining population is rapidly graying, with retirees growing in number much faster than new workforce entrants. It may be that output of a grayed population is lower. Downsized expectations might be in order, with a bit of solace taken in knowing neighboring countries, particularly China, will soon be in the same boat.

17 ( +24 / -7 )

I was just on a trip to Hokkaido and people were spending money as fast as they could pull it out of their wallet. All restaurants had long waits or no tables without reservations.

14 ( +18 / -4 )

Not good news.

14 ( +18 / -4 )

There have been many warnings for years which the LPD has ignored, also affirming that everything is fine and that their way is the best...and now we see the wisdom of their words and deeds.

10 ( +10 / -0 )

Tourists from SE Asia all over Japan now.

More and more immigrants too

The final push is coming when some major infrastructure fails and the spin will be that immigration is necessary to prevent Japan falling apart.

Of course, there will be objections but they will be overridden.

Japan is in for a major boom before the Japanese way of life changes inexorably and the downward slide gathers pace…

9 ( +15 / -6 )

The crazy things is that it is going to be used by the BOJ as a reason to do nothing saying we can’t raise rates because the economy is too weak.

It will mean more JPY depreciation, more inflation, falling real income, falling consumption which represent 70% of the economy, recession. Can’t they understand that what they are doing is part of the problem not the solution.

The Japanese economy face structural issues that can not be addressed by the central bank.

9 ( +10 / -1 )

Because we are aiming to bw the next Thailand or Philippines

It is now on the backpacker's map something unimaginable 30 years ago when it was the most expensive place on Earth.

8 ( +21 / -13 )

Germany is basically in recession. The other big economies of Europe are too. They all share a common factor. The boomerang effect of sanctions which has seen energy and commodities prices soar, thereby undercutting domestic industry (Japan and Germany as net exporters have willingly played the fool in this regard). The knock-on effect throughout the economy hits everyone's hip pocket.

Fortunately, they didn't totally cutoff Russian gas from the far east (Sakhalin-2) as that would have been a complete disaster. Ditto for seafood, timber, diamonds etc. It's not too late to reverse course on the other stuff. Moreover, the current stance is only helping China and other competitors.

8 ( +24 / -16 )

I was just on a trip to Hokkaido and people were spending money as fast as they could pull it out of their wallet. All restaurants had long waits or no tables without reservations.

They were mostly tourists from Asia, I guess.

With a population shrinking by ~1 Million per year, Japan cannot keep growing forever. Thats a given.

What the government should focus on is maintaining living standards and things like good healthcare and social services.

8 ( +15 / -7 )

The policy of the exceptionally low interest and quantitative easing (the long forgotten Abenomics sales pitch) has been in place for a long time. On the other hand, the fiscal policy has been tightly bound by the huge government deficits. That's like pushing an acceleration pedal and that of brake at the same time. That's very much mis-management of LPD government. The problem is that we don't see any viable alternative party.

8 ( +8 / -0 )

But but, Nikkei is above 38000, thoug?? Toyota is making record earnings....

But but BOJ promised we were in the right direction??

7 ( +22 / -15 )

Ha, just came back from an ecumenical conference in Paris, and the amount of well-heeled Japanese tourists I saw there spending large amounts of money like it was still 1989 was incredible. There are still many Japanese who are doing very well, thank you.

And yes, they were JAPANESE tourists.

This is a rather inane comment. Of course there are well-heeled Japanese out there - there always have been and there always will be. It says nothing about the wider picture.

7 ( +8 / -1 )

A great triumph for Kishidanomics indeed.

LDP takes Japan back down the hole of decline and what will change?

Not a damn thing.

5 ( +17 / -12 )

These articles are informative, if you follow, have an interest in "high-level overviews"..

What does it matter to you personally, whether Japan is top or bottom in the hit data parade of, “real GDP”, the “weaker yen”, the so called “relative weakness also reflects a decline in its population and lagging productivity and competitiveness”, or “real gross domestic product is a measure of the value of a nation’s products and services”.

It is you, that is relevant, what does government offer you, your quality life, your family, employment opportunities, the need to progress, to fulfil your ambitions.

Politicians, leadership in government have failed to perform to the standards they set for J society.

Failure, or simply incompetence in office, to tackle depopulation, accountability, take reasonability for sector wide policies that we the people, the electorate expect a minimum level of knowledge acumen, a basic comprehension grasp command, even the basic levels, of liveability, life-ability for your children in education, transport, health care.

Democracy, the freedoms, the trust we all demand expect from government, in the here and now, reflect the mediocracy, the betrayal of government, its complacency, and yes criminal neglect.

Worst is the zombie smart phone youth culture, without any interest in political leadership ability to manage, monetarily fiscally offer a future of prosperity, those failed pledges promise year after year. The debt.

Kids pass through University without even the minimum of life skills.

You must, should be rattling cages, kicking the chairs of your local diet members, I means getting under their skin, day in, day out, making them work earn your vote.

5 ( +7 / -2 )

Germany is doing something right.. A larger GDP with a smaller population (including a smaller workforce). On top of this the workers in Germany work fewer hour per hour = more days and time off.

5 ( +5 / -0 )

Japan slips into recession, becoming 4th-largest economy, behind U.S., China and Germany

Germany I think they can handle, but imagine the shock and horror when in a few years South Korea and Taiwan pass Japan, as is almost inevitable.

https://www.economist.com/graphic-detail/2022/02/01/by-one-measure-of-living-standards-south-korea-has-overtaken-japan

The blame for this is not on the hard-working Japanese people but the parasitic one party LDP state and their crony capitalist compatriots in Japan Inc.

They are keeping themselves well above water at the expense of everyone else in Japan.

4 ( +24 / -20 )

Shrinking sizes for products, reduced customer services which Japan is famous for nearly gone, wages from 20 years ago and no effort policies, what do you expect

4 ( +16 / -12 )

RedemptionToday  04:48 pm JST

I was just on a trip to Hokkaido and people were spending money as fast as they could pull it out of their wallet. All restaurants had long waits or no tables without reservations.

Mostly Asian tourists.

3 ( +5 / -2 )

My take on Japan’s problem is the country continues to maintain a monolithic cultural approach continually focusing on preserving its traditional cultural values, social norms, and political system without significant deviation. In other words, they continue to have policies aimed at maintaining cultural homogeneity, strict immigration controls, preservation of traditional institutions, and limited cultural integration with the global community at large. Because of this approach I think it is causing some very dire challenges in terms of Japan adapting to globalization, technological advancements, and changing demographics, which is potentially affecting the country’s economic growth and international relations. 

If Japan wants to continue to foster economic growth the country would have to seriously think about what they did in the past with their innovation and technology, where they did great and moved away from. The country needs to encourage investment in research and development and give the people the drive for more innovation, perhaps now in robotics, AI, renewable energy, and biotechnology. The country needs to look deeply into their structural reforms and perhaps implement reforms to increase their labor market flexibility, and deregulate certain industries, streamline the old hard line bureaucracy, and improve corporate governance to enhance competitiveness. They also need to look at a lot of the mom-and-pop business which do very well in the country they should support them by providing incentives they are really the backbone of the Japanese economy, the government should allow them to innovate, expand, and provide access to financing. Also, with trade the government should pursue trade agreements and partnerships to expand market access for Japanese goods and services, while also promoting exports and attracting foreign investment. A very serious challenge the country face is demographic challenges issues with an aging population and low birth rates the government needs to look very hard and make change through policies aimed at increasing workforce participation, supporting working parents, and enhancing immigration policies. If the country can continue to promote sustainable development as they do with tourism promotion they will and can leverage Japan’s rich cultural heritage, natural beauty, and technological advancements. If they can change the educational system and workforce development and train workforce with the skills needed for a modern economy, through STEM (science, technology, engineering, and mathematics) fields I think Japan can do well. If they can just get away from centralized revitalization and get into the thinking of regional revitalization and not just have employment in certain major cities that too will help, if the government can change their ways of thinking and encourage investment and development in rural areas to address regional disparities hopefully this will promote balanced economic growth across the country. Finally if the government could foster collaboration between industry, academia, and the civil society to drive innovation, as well as address societal challenges, this too will promote sustainable economic development for Japan through public and private partnerships.

3 ( +3 / -0 )

JJEToday  04:58 pm JST

Germany is basically in recession. The other big economies of Europe are too. They all share a common factor. The boomerang effect of sanctions which has seen energy and commodities prices soar, thereby undercutting domestic industry

I think you are a year too late. Sanctions were the big topics of 2022. And this article talks about 2023 performance.

2 ( +12 / -10 )

Tax hike and price inflation on the horizon...brace yourselves!

2 ( +11 / -9 )

And they talk about higher wages. LOL

2 ( +12 / -10 )

I know I am a moaning minnie, Mum Dad, have stated as such, more times then I can remember, my last comment could be US/UK/any EU member state/Australia you stick a pin globally.

Politicians aren't born, they are hatched and take office.

2 ( +3 / -1 )

If Japan Inc were in fact a company rather than a journalistic device, you would be seriously questioning it's business model and whether it required serious restructuring.

It's 'business model ' emerged as a rapidly growing educated workforce - it was the first to market with that model. It transitioned from low wage to high wage skilled economy easily, and again there was limited competition.

But now it gives itself outflanked on nearly all sides. It was caught napping by big Innovations where it should have been a leader (the smart phone) and has lost ground to China and Korea who were able to offer similar products more cheaply.

It needs to consider how it will face the future, but demographics means that it will have to kick harder just to keep its head above water. The current model means that it is being displaced and becoming irrelevant to the wider world apart from as a bucket list tourist destination.

2 ( +4 / -2 )

I think one needs to look not just at a country's GDP, but also its standard of living. Japan seems like a good place to live for most people. They certainly don't have our problem of gun violence.

2 ( +5 / -3 )

I think one needs to look not just at a country's GDP, but also its standard of living. Japan seems like a good place to live for most people. They certainly don't have our problem of gun violence.

Agreed. Gun crime is negligible in Japan, as is most petty crime that affects daily life.

We can all complain about the social constraints that Japan imposes on its citizens from an early age, but somehow it leads to more socially responsible adults.

The worry is that one day Japan may go broke and it may all fall apart quickly.

2 ( +2 / -0 )

Incompetence and greed of LDP regime and large corporation groups are gradually ruining country or future or even the lives of people.

2 ( +3 / -1 )

It wasn't too far off that Japan was just as crime-ridden as America before the bubble era. We are already looking at a perceived spike in bold crime, such as smash and grabs occurring in Japan and cybercrime.

The currency manipulation should have been addressed when the last inept guy left the BOJ..

2 ( +2 / -0 )

GDP figures will always make the economy of a country with a falling population look worse than it actually is. The quality of housing and infrastructure and the state of the environment in Japan have improved in leaps and bounds since I've been here.

Quite a few other developed countries, like Canada, have seen the reverse trend: worsening socio-economic conditions, yet positive GDP figures, simply because there's more immigration.

2 ( +2 / -0 )

Japan's 2023 GDP, $4.2 trillion

California's 2023 GDP, $4.0 trillion

Japan has more than three times the population.

1 ( +1 / -0 )

Germany's 2023 GDP, $4.5 trillion, but they have more than twice the population of California, and our weather is way better. I do prefer their food and drink, though.

1 ( +2 / -1 )

Watching what seems to be an imbedded resistance to admitting, recognizing or facing outdated practices or structural reform, we see a culture that has allowed itself to stagnate both from a top-down and a bottom-up level. It seems taking personal responsibility is one of the greatest fears and to be avoided at all costs, and keeping yourself working on incidental tasks counting the days to retirement is the better strategy to rocking any boats. Lots of pretending and time wasting, lots of people all holding buckets trying to empty water from the sinking ship where fixing the hole in the hull should have been the obvious focus years ago.

Someone else's problem, not mine. The J social contract of if you keep your head down and go through the motions ( no matter how absurd) then the group will look after you. Three decades now that this collective ball drop that has permeated all levels of the social strata. We can all try our best to breath some life and ambition into those around us, but the instinct to non action is still very strong. It's weird to witness it day in day out still hoping they will somehow make the adjustments necessary to change the mindset, one that aims towards productivity with a competitive spirit that led to the rise of Japan in the 70s and 80s. It's a different generation now though, and the damage may well have been done. The care factor just doesn't seem to be there on a large enough scale. Pray I'm wrong and have only seen my little corner of the place. Hear rumblings and rumors that certain sectors are starting to thrive.

Who knows though ay, AI and robotics could suprpise us all but I often go back to singapores founding fathers Lee Kuan Yew stark warning back in 2012.

"Japan is on a stroll into mediocrity. It is not going to be a threat to anyone. It is not going to be a vibrant, dynamic society. It is going to be a comfortable, prosperous society, but not a leader in anything."

Comfortable for the time being, prosperous remains to be seen once the savings run out. Every day though, hoping for that miracle that wakes people up to their creativity and potential. It's bubbling just under the surface too, waiting to be released. One of the hardest things to witness is wasted or unrealized potential.

1 ( +3 / -2 )

It took 200 years for the Aztecs to disappear and become Spanish. Its only been 70 years since WW2 and it isnt all that bad to become American anyways. India was 25% of global output when England discovered it and reduced that to 1%. But at least the Indians managed to recover.

1 ( +1 / -0 )

The results of having the same political party in charge since the war with the majority of politicians ages over 60. The LDP cronies have nothing new in their playbook so until some real political reform comes about Japan will continue to slide!

1 ( +2 / -1 )

Because during the nine years of Abenomics, he ordered to print alot of money and causing the Yen deprivation. Actually Japan is still being Japan but the falling Yen's value has making Japanese people living in a hard life. And the situation won't be good for at least a decade and it will have political chaos over the nation if such deterioration of Yen value persists!

1 ( +1 / -0 )

JROToday  05:35 pm JST

negatives of a weak yen are put on the average consumer through higher prices.

But the Fighto guy comes now and tells us Nikkei 38000 is the best thing that happened to Japan.

0 ( +7 / -7 )

Agreed, and I like that fitting description 'a race to the bottom' as David Brent commented above. Well, in fact it is not an intentional race, but more like a free and accelerated fall. That's exactly the explanation here too, both countries sink very fast , for quite different reasons though, but last year Japan a bit faster than Germany. That ranking can of course quickly change again and I guess it will, but the problem is, that it in practice remains a fall anyway.

0 ( +3 / -3 )

And now is the perfect time to double the defense budget (never going to happen).

0 ( +1 / -1 )

While Japan's drop to fourth place is "news", no one can claim it's a surprise. While economic growth is propelled by both tangible and intangible factors, two sentences in this article highlight key factors negatively affecting Japan's economy:

"But Japan’s relative weakness also reflects a decline in its population and lagging productivity and competitiveness, economists say."

"At the same time, businesses have been invested heavily in faster growing economies overseas instead of in the aging and shrinking home market."

No "advanced country" has successfully reversed a declining birth rate to achieve population growth, and I'll wager Japan will be unable to do so as well. Japan's options are opening the door to immigration, or implementing measures to boost labor productivity - an indicator on which Japan lags far behind as well. Sadly, I don't think more cute but otherwise useless robots will do the trick.

As a final note, businesses would be more likely to invest in Japan if policies to boost population and per capita productivity resulted in rising consumption spending.

I'm not holding my breath...

0 ( +0 / -0 )

""Robotics, another option, are gradually being deployed but not to the extent they can fully make up for the lack of workers.""

Here you go, Robots is the answer.

Soon Robots can have sex and produce mini Robots and we can have as many as we wish labor shortage solved.

-1 ( +4 / -5 )

No surprise at all,Japan need a brand new political class and open up to the world giving same rights to the foreigners that live in Japan.

-1 ( +4 / -5 )

Should this be surprising if your leaders that you vote serve another master, willing and prepared to sacrifice your self interest (e.g. business, exporters) for geopolitical containment? Should this be surprising when your leaders treat your country as a forward base or an unsinkable carrier as target? Should this be surprising when your leader are more concerned about photoshoots with other leaders that you crave for attention?

-1 ( +0 / -1 )

Why is the RS of the USA the number one economy, they print there own money that's why.

-1 ( +0 / -1 )

Far worse Japan than official #4 &$4.2T GDP, WHY?

1) Ending 2023 Yen approx. 140/$, today, 150/$

2) Govt. Debt 2023 Service +5% GDP-no economic value

3) Govt 2023 borrowing +5% GDP, not sustainable GDP

Japan's effective/real GDP today, approx. $3.5T

Late 1980s & early 1990s, Japan's GDP hit $8T, while global economy was +3x smaller, making Japan's global GDP weight today approx. 8x SMALLER & Shrinking Fast!

-2 ( +6 / -8 )

Wo wo wo wowwwooo you're slippin away from meeeee

-2 ( +0 / -2 )

number 1 debt country!, all built with fake money...

-2 ( +0 / -2 )

TokyoLivingToday  05:32 pm JST

Keep fighting Japan!!..

fight what? against who? With what strength?

fight against haters with its impressively aging population?

or incredibly undervalued Yen?

"Ganbare Nippon" does not help Japan in this case.

Keep trusting LDP, your fight will be one for ages.

-3 ( +12 / -15 )

All those zangyous, ganbattes and gamans will be lost in time… like tears in rain…; smh, Japan.

-3 ( +2 / -5 )

Japanese company PFN ordered the world's first 2nm AI processor from Samsung instead of Rapidus.

https://wccftech.com/samsung-secures-first-2nm-chip-order-from-japanese-startup/

Samsung Reportedly Secures First 2nm Chip Order From Japanese Startup Who Decided To Forego TSMC

-3 ( +0 / -3 )

Japan's domestic non-immigrant population shrinking approx. 3k/day & accelerating, plus aging. Economic collapse without more immigrants & greater automation.

Galapagos disconnected Japan's not globalizing, hence the economic stagnation continues.

-4 ( +7 / -11 )

Whole problem is COUNTRY mindset. In real world of great corporation and globally economy, there's NO COUNTRY. Its global culture based upon shared values and standards that creates great solutions and wealth.

Culture Capture = Economic Suicide in 21st Century

-4 ( +7 / -11 )

When China's GDP over took Japan's it couldn't be helped since China's population was so much bigger than Japan's , but now we have Germany's GDP surpassing Japan's and its population is way smaller. In Japan we see so many people literally doing nothing.....the pensioners fair enough, though they never seem to volunteer much, but the useless 'guardmen' take it a step too far.The productivity level in Japan is so poor. 10 years later and it will be either foreigners doing it or the country falling completely apart.

-5 ( +8 / -13 )

TokyoLivingToday  05:32 pm JST

Keep fighting Japan!!..

fight what? against who? With what strength? 

fight against haters with its impressively aging population?

or incredibly undervalued Yen? 

"Ganbare Nippon" does not help Japan in this case. 

Keep trusting LDP, your fight will be one for ages.

Same here.

-6 ( +7 / -13 )

Because we are aiming to bw the next Thailand or Philippines

-8 ( +18 / -26 )

I remember 1989 when Japan was 'destined' to become number one.

Fast forward to 2024 and the US's GDP per capita is very much more than double Japan's.......well done LDP.

-8 ( +29 / -37 )

Far worse Japan than official #4 &$4.2T GDP, WHY?

1) Ending 2023 Yen approx. 140/$, today, 150/$

2) Govt. Debt 2023 Service +5% GDP-no economic value

3) Govt 2023 borrowing +5% GDP, not sustainable GDP

Thus, Japan's effective/real GDP today, approx. $3.5T

Russia's per IMF, 2022 GDP per capita $35.3K, grew far more than Japan in 2023, as currency strengthened, almost no sovereign debt, GDP ending 2023 approx. $5.5T, #3 globally, huge resources and MANY new legal Russian citizens from Ukraine, approx. 10M since 2014.

-8 ( +8 / -16 )

Does these Measurment's really matter bearing in mind Japan quality of life is higher than all those 3 top nations?

-8 ( +13 / -21 )

Global economy is like dominos. Stars with weak leadership in the white house. A beautiful display of dominos falling clicking and clacking (politics, lies, media, saying nothing to see. Nothing to worry about).

Now look at you all back of the bus now with a global lagging economy and high inflation and high interest rates. Don't worry Japan. Its not your fault.

-8 ( +1 / -9 )

Ha, just came back from an ecumenical conference in Paris, and the amount of well-heeled Japanese tourists I saw there spending large amounts of money like it was still 1989 was incredible. There are still many Japanese who are doing very well, thank you.

And yes, they were JAPANESE tourists.

-8 ( +4 / -12 )

I was just on a trip to Hokkaido and people were spending money as fast as they could pull it out of their wallet. All restaurants had long waits or no tables without reservations.

Those same people 10 years ago were in Honolulu.

Nowadays they can't afford it.

-12 ( +14 / -26 )

The race to the bottom has picked up pace!

-14 ( +17 / -31 )

Keep fighting Japan!!..

-18 ( +2 / -20 )

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