Japan: As a result of weak domestic demand, Japan’s economy shrank for a second quarter before unexpectedly entering a recession. This led some observers of the central bank to reevaluate when the country’s negative interest rate policy would end.
As China’s economy expanded in 2010, the nation’s economy dropped from being the second largest in the world—behind the United States—to the third largest.
Japan was expected to drop to fourth place by the International Monetary Fund.
Nominal GDP, which is expressed in dollar terms and does not account for various national conditions, is used to compare the economies of different countries. The nominal GDP of Japan was $4.2 trillion, or roughly 591 trillion yen, in the previous year. Germany’s was $4.4 trillion (or $4.5 trillion, depending on the exchange rate) when it was announced last month. According to Cabinet Office data on real GDP, the Japanese economy shrank at an annual rate of 0.4% for the most recent quarter ending in October and December, down 0.1% from the previous quarter. The real GDP increased 1.9% over the course of the year.
The value of a country’s goods and services is gauged by its real gross domestic product. If the quarterly rate had continued for a full year, the annual rate would have represented the outcome. Strong, productive small and medium-sized enterprises were the foundation of the economies of both Germany and Japan. Germany, in contrast to Japan, has demonstrated a strong economic base supported by inflation and a robust euro. Japan also suffers from the weak yen.
According to Tetsuji Okazaki, an economics professor at the University of Tokyo. The most recent data reflect the reality of a weakening Japan and will probably lead to Japan commanding a lesser presence in the world.
For example, a few years ago, Japan had a strong auto industry. However, even that benefit is under threat from the introduction of electric cars, he said. According to Okazaki, the difference in nominal GDP between developed and emerging countries is closing, with India expected to surpass Japan in the near future.
