Special correspondent of our newspaper, Song Yi
According to a report by Japan's Daily News on the 24th, the latest report from the International Monetary Fund (IMF) predicts that in US dollars, Japan's nominal gross domestic product (GDP) will be surpassed by Germany in 2023, sliding from third place in the world to fourth place. Meanwhile, the IMF predicts that India will become the world's fourth largest economy by 2026, while Japan will decline to the fifth largest economy between 2026 and 2028.
The economic outlook released by the IMF shows that Japan's nominal GDP in 2023 is approximately $4.23 trillion, a decrease of 0.2% compared to 2022. In 2023, Germany's nominal GDP will grow by 8.4%, approximately $4.43 trillion. In terms of per capita GDP, Germany will also be higher than Japan. Germany's per capita GDP is expected to be 52800 US dollars, while Japan's per capita GDP is approximately 34000 US dollars.
According to Kyodo News Agency analysis, the depreciation of the yen is a major reason why Japan's nominal GDP has been surpassed by Germany this year. According to Bloomberg 24, at the time of the release of this forecast, the yen/euro exchange rate was hovering near the level of 160. The last time the euro/yen hit this level was in August 2008, and the yen/dollar exchange rate was close to a 33 year low.
Bloomberg analysis suggests that the weakness of the yen is largely due to differences in monetary policy between central banks - the Federal Reserve and the European Central Bank have significantly raised interest rates to combat inflation, while the Bank of Japan has maintained a stimulus model, hoping to promote price growth after years of deflation. The market expects that the Federal Reserve and the European Central Bank will keep interest rates unchanged at their upcoming meetings, but borrowing costs will remain high for a longer period of time, which may continue to put pressure on the yen. The Bank of Japan will hold a meeting next week, and there is speculation that it may adjust bond yields, but it is widely expected that its negative interest rates will not end until next year.
In addition, price increases also have an impact on nominal GDP (nominal GDP growth rate minus inflation rate is the actual GDP growth rate). According to Daily News, based on monthly inflation rates, Japan's consumer price index generally rose by around 3% year-on-year in 2023. But Germany's growth rate at the beginning of the year was about 9%, which gradually slowed down and dropped to around 4% in September.
The Japanese media is abuzz with discussions about their own economy. The Nihon Keizai Shimbun said on the 24th that the IMF's economic outlook for Japan and Germany "reflects the long-term downturn of Japan's economy". In 2000, Japan's economy was larger than it is now, at approximately $4.97 trillion, ranking second in the world. At the beginning of 2000, the Japanese yen exchange rate was around 105 yen to the US dollar. At that time, the size of Japan's economy was 2.5 times that of Germany and 4.1 times that of China. In 2010, China, which surpassed Japan to become the world's second largest economy, is expected to have an economic scale 4.2 times that of Japan by 2023.
The Daily News commented that Japan is experiencing a long-term period of low economic growth. The size of a country's economy is closely related to its international discourse power. If Japan loses its position as the world's third largest economy, its international presence may further decline. Japan surpassed the then Federal Republic of Germany in 1968 to become the world's second largest economy, calculated based on Gross Domestic Product (GNP) at that time. Economist Shigeru Ishikawa from the Japan Institute of Comprehensive Studies commented on social media on the 24th that, in the context of low economic growth and weak yen, it is foreseeable that Japan will be surpassed by Germany to some extent. However, when this day arrives, it is still sad.
Japan's growth potential has indeed fallen behind and is still sluggish. We hope to regain the land we have lost in the past 20 to 30 years. When asked about the attitude towards the IMF's prediction, Japanese Minister of Economy and Industry Nishimura responded on the 24th. ▲