Business

Japan falls into recession

Japan unexpectedly slipped into a recession at the end of 2023, losing its title as the world’s third-biggest economy to Germany.

Japan’s Gross Domestic Product (GDP) fell an annualised 0.4% in the October-December period after a 3.3% slump in the previous quarter, government data showed on Thursday, February 15, 2024, confounding market forecasts for a 1.4% increase.

Two consecutive quarters of contraction are typically considered the definition of a technical recession.

While many analysts still expect the Bank of Japan to phase out its massive monetary stimulus this year, the weak data may cast doubt on its forecast that rising wages will underpin consumption and keep inflation durably around its 2% target.

A senior economist at Moody’s Analytics, Stephan Angrick, said: “Two consecutive declines in GDP and three consecutive declines in domestic demand are bad news, even if revisions may change the final numbers at the margin.

Germany overtakes Japan as third-biggest economy

“This makes it harder for the central bank to justify a rate hike, let alone a series of hikes.”

Economy minister, Yoshitaka Shindo, stressed the need to achieve solid wage growth to underpin consumption, which he described as “lacking momentum” due to rising prices.

“Our understanding is that the BOJ looks comprehensively at various data, including consumption, and risks to the economy in guiding monetary policy,” he told a news conference after the data’s release, when asked about the impact on BOJ policy.

The yen was steady after the data and last stood at 150.22 per dollar, pinned near a three-month low hit earlier in the week, Reuters reports.

Yields on Japanese government bonds fell after the data as some traders pushed back bets of an early BOJ policy shift. The benchmark 10-year yield slid 4 basis points to 0.715%.

The Nikkei stock average rallied to 34-year highs, with the data further underpinning recent reassurances from the BOJ that borrowing costs will stay low even after ending negative rates.

Japan’s nominal GDP stood at $4.21 trillion in 2023, falling below $4.46 trillion for Germany to rank as the world’s fourth-largest economy, the data showed.

The Star

Segun Ojo

Recent Posts

Premier League: Liverpool thrash Tottenham in 9-goal thriller

Liverpool moved four points clear at the top of the Premier League after both Luis…

10 hours ago

EPL: Bournemouth thrash Man United at Old Trafford as Everton draw Chelsea

Bournemouth thrashed Manchester United 3-0 in the Premier League at a chilly Old Trafford on…

12 hours ago

‘It’ll improve access to education’: Kaduna poly lauds Uba Sani on retirement age

Nuhu Bamali Polytechnic has commended Kaduna State Governor Uba Sani for increasing the retirement age…

13 hours ago

Atiku: 2025 budget lacks reforms to tackle Nigeria’s woes

Former Vice President Atiku Abubakar says the 2025 budget presented by President Bola Tinubu to…

13 hours ago

Ijaw youths raise the alarm: Oil thieves after Kyari, Tompolo, Otuaro

The Ijaw Youths Network has raised the alarm over the intensified blackmail of huge international…

14 hours ago

NDLEA stops Italy-based businesswoman from exporting drugs via Lagos airport

The operatives of the National Drug Law Enforcement Agency (NDLEA) have foiled an attempt by…

17 hours ago

This website uses cookies.