Gross domestic product grows 0.4 percent amid expectations of an end to negative interest rates as soon as this month.
Published On 11 Mar 202411 Mar 2024
Japan’s economy has narrowly avoided recession, underscoring the economic challenges facing the East Asian giant even as its stock market is cruising at its highest levels in decades.
Gross domestic product (GDP) grew an annualised 0.4 percent between October and December, up from earlier provisional data that showed a 0.4 percent contraction, Japan’s Cabinet Office said on Monday.
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On a quarterly basis, GDP expanded 0.1 percent, revised up from an estimated 0.1 percent decline.
Japan’s government last month announced provisional figures showing that the economy had unexpectedly slipped into recession amid sluggish domestic demand and private consumption.
While the revised figures mean that Japan escaped recession – defined as two consecutive quarters of negative growth – it continues to be the world’s fourth-largest economy after losing the number three spot to Germany.
The improved figures are likely to boost expectations that the Bank of Japan may end its unconventional policy of negative interest rates, introduced nearly a decade ago, as soon as this month.
Japan’s economy has struggled with meagre growth throughout several “lost decades” following the collapse of a massive asset bubble in the early 1990s.
Despite the Japanese economy’s struggles, Tokyo’s stock market is riding high as foreign investors take advantage of the cheap yen and corporate governance reforms that have boosted returns for shareholders.
The benchmark Nikkei 225 index earlier this month smashed the 40,000 mark for the first time, after surpassing its 1989 peak in February.
Source
:
Al Jazeera and news agencies
FAQs
Japan has avoided falling into a technical recession after its official economic growth figures were revised. The revised data shows gross domestic product (GDP) was 0.4% higher in the last three months of 2023 compared to a year earlier.
How did Japan avoid a recession? ›
The fresh data meant Japan's economy, now the world's fourth-largest behind Germany, avoided a technical recession thanks to companies' stronger-than-expected spending on plants and equipments. On a quarter-on-quarter basis, GDP grew 0.1%, compared with the initial 0.1.
Is Japan experiencing a recession? ›
Japan entered a technical recession in H2 2023. The first estimate of Q4 GDP indicates a modest contraction of -0.1% q/q following a more significant downturn of -0.8% q/q in the previous quarter.
Why did Japan's economy stop growing? ›
Stagnant growth in subsequent years has led the period since 1991 to sometimes be referred to as Japan's Lost Decades. Misguided government policies in response to a real estate bubble are considered to be the main culprits for the Lost Decade.
Why do you think that Japan's economy escaped from falling into a deep recession? ›
Japan's economy avoided falling into a recession at the end of last year, helped by robust spending by businesses, an outcome that improves the optics for the central bank as it mulls the timing of its first interest rate hike since 2007.
Has Japan avoided technical recession as economic growth figures revised? ›
Japan has avoided falling into a technical recession after its official economic growth figures were revised. The revised data shows gross domestic product (GDP) was 0.4% higher in the last three months of 2023 compared to a year earlier.
How did the Japanese economy recover so quickly? ›
The low cost of imported technology allowed for rapid industrial growth. Productivity was greatly improved through new equipment, management, and standardization. MITI gained the ability to regulate all imports with the abolition of the Economic Stabilization Board and the Foreign Exchange Control Board in August 1952.
Why is Japan's economy so stable? ›
Japan is one of the largest and most developed economies in the world. It has a well-educated, industrious workforce and its large, affluent population makes it one of the world's biggest consumer markets.
Does Japan have a thriving economy? ›
The Japanese economy is the fourth-largest in the world, as measured by gross domestic product (GDP). Japan has a market economy that grew extraordinarily quickly for several decades after World War II.
When did Japan face a major economic crisis? ›
Japan was hit hard by the global financial crisis of 2008-2009; it was the only major advanced economy that experienced negative economic growth in 2008 and continues to contract sharply in 2009 (Figure 1).
But most of Japan's debt is owned by domestic investors. The country's external position is bolstered by a large current account surplus and foreign exchange reserves worth more than $1 trillion. At the end of last year, Japan's overseas assets were around 84% of its annual economic output.
Why did Japan fail in the economy? ›
In such a situation, Japanese companies began to cut wages, research and development, and other investments, opting to hold onto cash instead. This tendency, coinciding with the acceleration of the ageing population, gradually diminished the competitiveness of the economy and the potential growth rate of the country.
Why Japan has stopped growing? ›
Third, Japan's population structure was shifting and becoming increasingly elderly. The aging meant slower growth of the labor force. The aging and the declining fertility also reduced the domestic saving that supported economic expansion during the rapid economic growth period.
Is Japan in a recession right now? ›
On a quarterly basis, GDP expanded 0.1 percent, revised up from an estimated 0.1 percent decline. Japan's government last month announced provisional figures showing that the economy had unexpectedly slipped into recession amid sluggish domestic demand and private consumption.
Why has Japan slipped into recession? ›
Synopsis. Japan's economy slipped into recession on weak domestic demand, raising uncertainty about the central bank's plans. Japan lost its title as the world's third-largest economy. BOJ may sharply downgrade GDP forecasts.
Is Japan finally recovering? ›
“We can finally confirm a recovery from that.” Economists forecast Japan's economy contracted a bit in the first quarter of 2024 after eking out growth in the last period of 2023. Saito said he believes the economy will return to growth in the second period.
How did Japan keep inflation low? ›
Inflation is soaring in countries around the world – but not in Japan. Government price controls, an ageing population and negative interest rates are among the factors keeping down inflation in Japan.
How did Japan get out of stagflation? ›
2 - Economic liberalization
Japan has become one of the most open economies in the world. The government ended controls on the financial system, and the country's high savings rate and investment rate have allowed for rapid capital accumulation.
How did Japan respond to the financial crisis of 2008? ›
General crisis response in Japan
To this end, the Government set a record-high ¥88.55 trillion budget for the fiscal year 2009-2010 (ending March 2010). In April 2009 it announced a ¥15.4 trillion stimulus plan, equal to 3 percent of GDP, which brought Japan's total stimulus spending since autumn 2008 to ¥27 trillion.
What did Japan do to avoid financial ruin during the Great Depression? ›
Between 1931 and 1933, the government switched to Keynesian policies, well ahead of other Western countries, to boost aggregate demand. Currency depreciation, fiscal stimulus, and easy monetary conditions helped Japan to recover from the worldwide depression earlier than most countries in Europe and North America.