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IMF projects Japan's GDP to fall to world's 4th in 2023 after Germany

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Herman Kahn's (1970) The Emerging Japanese Superstate and Ezra Vogel's (1979) Japan as Number One: Lessons for America seem wide of the mark these days.

8 ( +19 / -11 )

One of Merkel's justifications for bringing in a million refugees in 2015 is that it would raise German's GDP. True, the more people you have, the bigger your GDP. But that's pathetic as an economic policy, as it tends to worsen most people's living conditions, and the higher GDP tells you nothing about socio-economic conditions.

Today, Germany's economy is a mess, largely a Merkel legacy, expected to shrink this year. Thankfully, Japan's policymakers, while not great, aren't as bad as Germany's, and our economic outlook is considerably brighter. A ranking of countries with the world's highest socio-economic levels is dominated by small population countries, with relatively small GDP.

https://www.france24.com/en/live-news/20231011-german-economy-to-shrink-in-2023-govt-says

9 ( +16 / -7 )

GDP per capita is the meaningful marker.

11 ( +15 / -4 )

IMF projects Japan's GDP to fall to world's 4th in 2023 after Germany

Oh those heady days.

https://www.hup.harvard.edu/catalog.php?isbn=9780674366299

Unfortunately Japan is still being led by the Bubble Era, Japan as Number 1 believers and they are using the falling living standards of the population to elevate themselves amidst general decline.

Which could be made.much gentler and beneficial to the public.

4 ( +10 / -6 )

And GDP per capita (PPP) as it factors in each country’s relative cost of living and inflation rate and is more accurate in country to country comparisons.

5 ( +8 / -3 )

The psychological effects of this will hit harder than the reality. Japan has been slipping in world rankings for quite a long time, and all the PR and games played by the ruling party are doing nothing to stop it.

-1 ( +11 / -12 )

The math is simple. Germany's population is 81 million.

GDP per capita is the meaningful marker.

11 ( +13 / -2 )

As the unfunded projects by Kishida keep piling up, expect JPY to weaken further. The fact is Japanese government can't even afford to raise the interest rates with the over 200% debt to GDP ratio. And whatever nominal GDP growth obtained from the weak yen gets eaten up by the much larger drop in the exchange rate.

4 ( +10 / -6 )

Just another sign of Japan's decline and relevance. Japanese universities have also been on the decline in world rankings so the pool to draw from for the future doesn't look very optimistic. Too many government leaders stuck in the Showa age and can't think outside of the box. Stagnation eventually leads to rot.

-7 ( +13 / -20 )

We are living in the new Ottoman empire.... A long slow steady decline.

-12 ( +9 / -21 )

with the EV market detained by the Chinese, TOTOYA, the biggest company and the number one indebt company in Japan has no chance.

when I check my high spec SONY TV, it is written (made in China).

Japan Bubble which [the made in Japan] had a meaning before is over.

-10 ( +7 / -17 )

RoyToday  08:51 am JST

nobody forces you to read the truth..

-13 ( +3 / -16 )

Reality check. It's not too late!

0 ( +1 / -1 )

Japan is like a snow ball rolling down a mountain.

The decline is picking up pace.

-7 ( +9 / -16 )

I am absolutely not surprised by this news.

Germany despite having a lower population compared to Japan was able to modernize itself and most important is in a union of other 26 states with free markets like the European Union.

To don’t mention the more relaxed attitude and less hour work with higher wages compared to Japan.

To don’t mention that the social welfare is holding well.

-9 ( +7 / -16 )

Not a great surprise: an aging, shrinking population with little immigration will have this effect. It is the future for many countries - not just Japan.

That said, GDP is really only a number on a spreadsheet. It's how people live their lives that counts. Regardless of GDP, Japan's overall standard of living, infrastructure, health care, public services etc. are very high, and something the country should be proud of. GDP does not portray this at all.

Compared to the current number 1 and 2 economies (USA: poor health care, poor infrastructure, and high wealth inequality; China: horrific, totalitarian dictatorship with a whole host of problems), I'd much rather live in Japan.

7 ( +13 / -6 )

That's more a theoretical issue. It's not based on more economical strength but mostly based on the currency conversion rates. That ranking is calculated in US$, that's why Japan with currently weak Yen, might fall behind in paper value. A closer look will surely bring you the easy knowledge that all top ranks have similar heavy economic problems and decreasing tendency.

4 ( +5 / -1 )

Jonathan, you're right: Per capita is the only relevant statistic. GDP per capita in 2022 was $48,636 in Germany and $33,731 in Japan.

Good line graph here: https://countryeconomy.com/countries/compare/germany/japan?sc=XE34

5 ( +5 / -0 )

We can always play with numbers.

For environment issues, going with emmissions per capita for China and India will produce lower numbers per person but does it change the fact that the overall output for China and Inida?

For GDP, capita per person may be higher in one country but Germany for example is no doubt facing a crisis and recession and suffering despite the gdp per capita.

-3 ( +0 / -3 )

maybe stop raising taxes and prices

2 ( +3 / -1 )

Well, so far 8 people don't seem to want to accept that Kahn and Vogel were wrong! I guess they have never read the books. Try it. Treat yourselves to some education.

-4 ( +2 / -6 )

These numbers kind of mean something, but only if you dig far enough. One of the main reasons Japan is falling in this index and per capita, per capita PPP etc. is simple demographics. Japan is aging about 20 years earlier than European countries. Japan's working age population (of kokumin Japanese citizens) falls by about 1 million (!) every year. By 2050, without major immigration (of people from countries many locals don't like), Germany, Italy etc. will be the same.

I'm just back from the UK and can tell you that prices there are way higher than Japan. In spite of this, the official PPP numbers downgrade people in Japan's money more than the UK's. Expat polls often do the same based on the cost of some silly thing 99.99% of people in Japan don't pay for, like financial sector expat-sized apartments in Hiroo and Nishi Azabu. As a basic indicator, the Big Mac index, where Japan is close to cheapest among first world countries, is a far more illustrative.

6 ( +8 / -2 )

Japan has one of the highest debt-to-GDP ratios in the world, exceeding 200%. This means that the country's total debt is more than twice the size of its annual economic output.

A high debt-to-GDP ratio can create concerns about fiscal sustainability and the government's ability to service its debt, especially if interest rates were to rise significantly.

Raising interest rates on government debt could lead to increased debt-servicing costs, further straining Japan's fiscal situation.

Japan has been able to maintain low-interest rates due in part to the Bank of Japan's monetary policies, including its aggressive bond-buying programs.

The Japanese government's fiscal policies, such as stimulus measures and budgetary decisions, are influenced by the need to manage the debt burden effectively.

-1 ( +2 / -3 )

A high debt-to-GDP ratio can create concerns about fiscal sustainability and the government's ability to service its debt, especially if interest rates were to rise significantly.

Possibly though the key fact here is that the holders of Japan's debt, Japanese themselves, are not going to force up interest rates. Japan has not drunk the rentier capitalism kool-aid so prevalent in other countries. Lots of so-called entrepreneurship is simple landlordism. Varoufakis even calls Bezos a rentier because he profits from controlling a large realm in cyberspace, with Amazon's high commissions on it as a "rent".

Life in Japan remains okay for most despite low wages due to low personal debt, way lower than e.g. the USA. That's the debt that matters, because ordinary people don't have the printing press the government has.

3 ( +4 / -1 )

Hello poverty!

-3 ( +3 / -6 )

Well, the writing for this was on the wall a long time ago wasn’t it?

personally I’m very happy with the Yen depreciation, it means I end up better off. Sadly we cannot all be winners in these situations and this current one has more people worse off sadly.

-6 ( +1 / -7 )

The vast majority of Japanese could not care if their total GDP soon slips to 4th or 5th in the world. Irrelevant.

What the Japanese are demonstrating is that they can grow the economy with a shrinking population. Things are ticking along nicely. Unprecedented - and making more than a few jaws drop in economic circles worldwide.

-2 ( +2 / -4 )

Japan has one of the highest debt-to-GDP ratios in the world, exceeding 200%. This means that the country's total debt is more than twice the size of its annual economic output.

True - but what many dont know is that Japan is in the unique situation in that almost all debt is domestic - not foreign. Therefore, there is zero risk of default internationally.

The Japanese government can choose to service domestic debt at any time that suits them.

3 ( +4 / -1 )

The Japanese Government will never raise the interest rates even if they were hit in the head to do so, because they believe they are right no matter what and to hell to the daily lives of people trying to survive in this world. Stop giving out the subsidies, raise the interest rates moderately and so the yen may strengthen which decrease the cost of imports and bring down food prices. But no this will never happen, never, because the Japanese government officials are a bunch of ostriches with their heads in the sand who do not want to hear and or see anything.

4 ( +4 / -0 )

justaskingToday  04:06 pm JST

The Japanese Government will never raise the interest rates

in fact, the Japanese economy can not survive the interest rates as Gov, companies and individuals can not survive without loans. japan is already under heavy perfusion. interest rates hike will be the final cut!

Japanese government officials salaries can not even be afforded.

-4 ( +2 / -6 )

japan is already under heavy perfusion. interest rates hike will be the final cut!

Allowing tensions with China will be the final straw. Just look at it from the 80/20 view.

At least the Japanese are realistic and smart. They know they need China and won’t decouple with the CPC. Some of them even know this is an underhand way of the US to eliminate competition case in point the semiconductor chips.

This week, yet another U.S. leader is visiting China. The Governor of California is in China testing BYD and making deals. Japan needs to compete and not let everything go to Germany, the US and the West.

1 ( +2 / -1 )

One of Merkel's justifications for bringing in a million refugees in 2015 is that it would raise German's GDP. True, the more people you have, the bigger your GDP. But that's pathetic as an economic policy, as it tends to worsen most people's living conditions, and the higher GDP tells you nothing about socio-economic conditions.

Today, Germany's economy is a mess, largely a Merkel legacy, expected to shrink this year.

None of Germany's current economic problems are related to immigration. Not one. The German economy is suffering from a steep decline in exports, particularly the precision machinery it sells to China for their manufacturing sector. Inflation has reduced domestic purchasing power leading to households buying less, further decreasing demand for goods from German industry. Rising energy costs due to Germany's reliance on Russian oil and gas, and subsequently loosing access to these, further raised prices and make German goods less competitive. Higher interest rates to slow inflation are choking off new investment and construction. Last, Germany hasn't really done any economic reforms in the past decade. They let a lot of problems linger and now they are biting them in the backside.

If anything the Germans are looking to speed up immigration to plug labor shortages in critical industries.

4 ( +5 / -1 )

None of Germany's current economic problems are related to immigration. Not one. 

It’s amazing how often right wingers will try to tie anything into “it’s the fault of the foreigners”. You would think a forum full of foreign immigrants would be a little less extremist on such matters.

0 ( +1 / -1 )

GDP per capita and Gini coeffiicient/poverty rate to be precise.

0 ( +0 / -0 )

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