The fall of Japanese economy is becoming an irreversible trend
China Daily | Updated: 2023-10-27 08:11
The World Economic Outlook released by the International Monetary Fund in early October predicts that in 2023 Japan's nominal gross domestic product will be overtaken by Germany and the Japanese economy will slip from third to fourth place in the world, before falling to fifth when India surpasses it in 2026.
Nominal GDP refers to GDP without deducting inflation, which reflects the level of economic activity in a country or region, and is often used as an indicator to measure the size of an economy.
From 1968, when its GDP surpassed that of West Germany, to 2000, Japan's economy ranked second in the world, reaching a peak of $4.97 trillion, 2.5 times the size of Germany and 4.1 times that of China. In 2010, China overtook Japan to become the second-largest economy. If the IMF's forecast is verified, it would be Japan's lowest nominal GDP ranking since 2000.
Many economists believe that the sluggish growth of Japan's nominal GDP reflects Japan's failed efforts to revive the economy after Abenomics faltered, as well as its difficulty in returning the economy to an upward trajectory in the face of a declining population growth and dampened domestic consumption and exports.
The Kyodo News Agency quoted sources at the IMF as saying that after a new adjustment of the equity quota of IMF member countries at the end of this year, the share of Japan's voting power at the IMF may fall from the current second place, right behind the United States, to fifth place behind the US, China, Germany and the United Kingdom.
Japan had tried to ask the IMF to adjust the capital of member states in a way that it does not affect their existing voting power ranking, even eyeing the US' support on this. However, China and other emerging market countries want the voting power ratio to reflect the size of the economy.
The decline in Japan's economic strength has been determined by a number of factors, and this trend will be difficult to change for a considerable period of time.
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