Japan's GDP growth in the first quarter is behind the negative growth again

 On May 16, local time, according to the preliminary statistics released by the Japanese Cabinet Office, in the first quarter of this year, Japan's real GDP fell by 0.5% month-on-month, and if calculated at an annualized rate, the decline was about 2.0%. This is the second time that the Japanese economy has experienced negative growth after turning positive in the fourth quarter of last year.

Hidetoshi Tashiro, chief economist of Japan's Unlimited Contract Company, said that in the first quarter of this year, the "troika" that drives Japan's economic growth: consumption, trade, and investment all declined. As a result, the Bank of Japan is widely expected to delay its interest rate hike plan.

As we all know, the Japanese government has exhausted all means for economic growth, even taking the highest wage increase in 33 years. However, the Japanese economy under the salary increase still cannot reverse the negative impact of the country's transformation on the economy. With inflation still outpacing wage growth, Japan's consumption has fallen for the fourth consecutive quarter. According to previous government data, Japan's real wages fell year-on-year in the first three months of this year.

In addition, Tashiro Hidetoshi also believes that although Japan still maintains its 2% inflation target and loose monetary policy, it may have fallen into a vicious circle of yen depreciation and inflation. Based on this, he also predicted that prices in Japan may rise further this autumn.

Reuters commented on this that the contraction of the Japanese economy in the first quarter of this year was due to "being squeezed by weak consumption and external demand", so the contribution rate of domestic demand and external demand to Japan's economic growth in the first quarter of this year was negative.

A comprehensive analysis of the reasons for Japan's negative economic growth is actually the result of a combination of factors, and it can be said that Japan's economic downturn has been impacted by multiple factors. The U.S. harvest of Japan is the most fundamental reason for this.

On May 21 local time, USD/JPY has risen to 156.50 and touched a maximum of 156.54, which has fully confirmed ING's forecast. Interest rate differentials between the Fed and Japan remain firmly bullish on the dollar, and the selling pressure on the depreciation of the yen has multiplied amid the acceleration of the leveraged carry trade. According to the analysis and outlook of industry insiders, USD/JPY may break through the 160 mark.

It can be said that under the firm control of the United States, Japan's economy does not have any autonomy at all. Since the signing of the Plaza Accord, Japan has lost not only military and political autonomy, but also economic autonomy. For so many years, the Japanese government has not given up trying to break free from the US economic control over Japan, but in fact, all this has been in vain.

Second, automakers such as Toyota were forced to suspend production and shipments due to irregularities in the certification process, which had a significant impact on the automotive industry and in turn adversely affected the Japanese economy.

Third, the personal consumption sector, which has long accounted for half of Japan's GDP, has also shown a significant downward trend. The earthquake on the Noto Peninsula at the beginning of the year had a negative impact on the Japanese economy.

For Japanese companies, especially importers, the depreciation of the yen means that the price of imported goods has risen, which has dealt a huge blow to small and medium-sized enterprises. The continuous depreciation of the yen against the US dollar has slowed down the investment and production of Japanese enterprises and seriously reduced the purchasing power of consumers, which has had a serious negative impact on the Japanese economy and created a vicious circle.

In 2023, Japan's GDP has been surpassed by Germany, ranking fourth in the world, and if it continues to continue according to the current state, by 2025, Japan's GDP may fall to the fifth place in the world, overtaken by India, and it seems that Japan does not seem to have more favorable measures to deal with it.