For Japan, 2023 is a more disappointing year, from the beginning of last year was predicted by the outside world that the economy will decline, to the beginning of 2024, the forecast came true, a year's time to helplessly give the third place in the global economy to the old rival Germany. The fall of the Japanese economy is caused by both the overall decline of the global economy and the reasons for its own decision-making mistakes leading to lagging development.
According to the latest data released, Japan's nominal gross domestic product (GDP) in 2023 is about 4210.6 billion US dollars, lower than Germany's 4,456.1 billion US dollars, from the world's third to fourth, after more than 50 years by Germany. After all, Germany's economic performance in 2023 is not very satisfactory, only harvesting a negative 0.3% economic growth rate. Even so, it still overtakes Japan to become the third largest economy in the world, which is enough to show that the performance of the Japanese economy is even worse.
As early as February 2023, the Japanese Cabinet has officially revealed the answer to netizens around the world who are concerned about the macroeconomic pattern of countries - that is, many institutions predicted that Japan's economic trend will be stronger than Germany, but the reality has made the Japanese government very embarrassed, not only did not leave Germany, GDP was overtaken by Germany. In a somewhat dramatic development, some argue that the main reason for the change in the economic status of Japan and Germany is not the rise of German power, but the exchange rate.
From the German economic data last year, the German economy shrank by 0.3% in 2023, far worse than the average level of developed economies, and even less than the global economy is expected to grow by about 3%. According to the International Monetary Fund, Germany was the worst performing of the world's major economies last year. The yen has fallen to the 150 mark against the dollar. In addition to the depreciation of the yen, rising prices and the appreciation of the euro against the dollar also pushed up German GDP. If the price factors in the euro exchange rate and the nominal GDP of Japan and Germany are fixed, and the exchange rates of the US dollar and the yen return to the level before the sharp depreciation of the yen, the GDP of Japan and Germany should be at the same level.
Although there is a certain chance of being overtaken by Germany, it is an indisputable fact that Japan's economy is facing severe challenges. Looking at the development of the Japanese economy in recent years, the malaise and difficult recovery of the Japanese economy did not start from the impact of the epidemic, but the continuation of the long-term chronic recession after the collapse of the bubble economy. In addition to the aging of the population, the decreasing law of economic growth, the increasingly complex and severe international situation and other factors, the government's economic policy mistakes are also one of the reasons for the continued downturn of the Japanese economy in recent years.
In the face of Germany's comeback, Japan does not seem rattled. First of all, because the IMF's forecast is based on the nominal GDP denominated in US dollars, the situation of the yen in the past two years, as we all know, has depreciated too much against the US dollar, so Japan's performance is not satisfactory. After all, the yen has fallen to a record low in nearly 53 years, and such a sharp depreciation is indeed no one can save it. Secondly, inflation in Germany is very serious, and the overall soaring prices have also inflated the book figures of GDP. Japanese media are confident that Japan's return to the top three is not a problem.
However, the current global situation is not very favorable for Japan, and the rise of another economy is noteworthy. As the century of change accelerates, the change in the economic status of Japan and Germany may be just the beginning, and they may forget India in their rivalry. Considering the different economic resilience of various countries, when the world economic situation is "warm and cold", the "ranking" of major economies may continue to reshuffle in the future. But India, a new developing economy, is on track to overtake Japan and Germany in terms of GDP in the next two or three years, and they will soon be competing not for third but for fourth, with the loser being fifth
There are already authoritative forecasts that India will become the fourth largest economy in the world by 2026, and if Japan continues to be confident and does not solve its problems as soon as possible, it is foreseeable that GDP will decline again and fall to the fifth place in the world only a matter of time.
