How has Japan ‘unexpectedly fell into a recession’ and what does this mean in practical terms?
In: Economics
From an ELI5 perspective, nothing much practically speaking unless you’re in the financial markets (in which case, I doubt you’d be asking on this subreddit)
Japan has some structural demographic issues and has pretty much been on a low growth/no growth path for the last 25 years. Their economy also relies somewhat on selling to major economies like China, EU and US. While the US is doing OK, Germany and China are also struggling somewhat.
The “unexpected” part is that the Bank of Japan (BOJ – Japan’s central bank) had indicated that they were intending to reduce stimulus in 2024. Typically this kind of signal is given if the central bank believes that the economy is relatively healthy. So this is a mixed signal where economic data appears to not be aligned to monetary policy – which surprises the market.
But to put it in perspective from a Japanese standpoint, “strong” is +0.1% and “weak” is -0.1% so we’re not exactly discussing major swings in performance here and it might all end being a statistical anomaly.
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