They got overtaken by Germany a country with 50% lower population and the gap is widening. Their gdp per capita is below some Eastern European countries and way below other developed countries that used to have similar gdp per capita. Yen’s devaluation is getting faster so in the future I don’t think Japan can even be called a first world country anymore. What exactly caused this? I know Japan has been in recession since the early 90s but this last few years seem to be extra harsh on Japan
In: Economics
That is because GDP is not a good measure of the economy.
Japan’s GDP has fallen mainly because of the weak yen. So why did the yen weaken? That is because countries other than Japan have raised interest rates.
So why did countries other than Japan raise interest rates? That’s because inflation has intensified due to the failure of the Covid measures.
Japan, on the other hand, had far fewer infected people than the West and did not lock down its cities.
So to tell the truth, Japan’s economic situation is no worse than in the West.
While the Japanese still maintain a middle class, working regular jobs, saving money, and buying houses, that model is collapsing in the West.
Furthermore, Japan’s economy is growing despite its declining population. On the other hand, the West have managed to achieve economic growth by accepting large numbers of immigrants, but in reality, the lives of individual people are suffering.
Incidentally, Japan’s economy has deteriorated since the 1990s because of the Plaza Accord with the U.S., which made the yen stronger. This weakened Japan’s export industry, and China and Korea rose to prominence.
So people think of a weak yen as a bad thing, when in fact it is not necessarily bad. Although there is some confusion due to the sudden change in exchange rates, Japan’s economy has been sluggish to begin with because of the strong yen, which has restrained the export industry. So now that Japan currently has the highest stock market average since the 1990s. Conversely, China’s stock market is in freefall. Japan may be entering a decade of revival.
edit:
Looking at other comments, some people have answered that Japan can’t raise interest rates because of its debt, which is also wrong.
In fact, Japan’s external net worth has always been the highest in the world, and Japan is the least indebted country on a global scale. Since most of Japan’s debt is domestic, it can be repaid by printing money if it wants to. But of course, that is not good for the economy, so Japan simply has not done so while other countries have inflated.
I mean, do you really believe that countries with good economic conditions can raise interest rates and countries with bad ones cannot? Even Russia is raising interest rates to about 16%. And Japan, which until recently was 0%, has raised it to 1.1% because Japan is also somewhat inflationary. Perhaps those who express this opinion believe propaganda to try to prevent criticism of the government.
edit2:
I guarantee 90% of the comments here are bullshit lol They don’t seem to understand basic economics.
So the OP will probably never get to the truth.
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