Japan's Ministry of Finance released preliminary trade data for December 2022 and the full year on January 19, according to Interface Alert. The data shows that Japan's trade deficit reached about 1.45 trillion yen in December last year, and the trade deficit for the whole of 2022 was as high as 19.97 trillion yen, the highest since 1979. In addition, Japan's core CPI data rose 4.0% year-on-year in December, the fastest pace since 1981 and exceeded the Bank of Japan's 2% inflation target for the ninth consecutive month.
According to earlier Japanese media reports, Japan's trade imports and exports have been in deficit since 2021, and it was especially serious in 2022. This phenomenon is mainly affected by the Russian-Ukrainian conflict, sanctions against Russia and other factors, as well as the continuous rise in the price of raw materials for international energy and industrial production, and the sharp decline in the exchange rate of the yen against the US dollar. For Japan, which relies on trade exports to drive economic growth, trade conditions largely determine the direction of the economy. Therefore, a large trade deficit means that the Japanese economy is in a state of stagnation or even recession.
Japan's trade deficit in 2022 hit its highest record since 1979, dealing a severe blow to the country's economic situation. In fact, Japan's GDP in 2022 will be about $4.2 trillion in dollar terms, accounting for less than 5% of the global economy. In comparison, Japan's GDP accounted for about 5.11% of the global economy in 2021. This suggests that the Japanese economy is actually already in recession in 2022. According to estimates by relevant agencies, Japan's GDP in 2023 is expected to fall further compared to 2022, and its share of the global economy may fall to about 4.8%.
After the so-called "lost 30 years," the Japanese economy seems to be in recession again. It is expected that in the near future, Japan may lose its status as the third largest economy in the world and be classified as a "middle economic power", as the Japanese media put it. At the same time, as the economy continues to decline, the pressure on people's lives is also increasing.
However, despite the severe recession facing the Japanese economy, the Kishida administration does not seem to be focusing its efforts on improving the country's economic situation. Instead, they devote more resources to buying U.S. missiles and building warships to achieve Japan's goal of becoming a so-called "normal country" capable of aggression against other countries. According to the Tokyo government's 2023 National Security Strategy and other documents, Japan plans to raise defense spending to more than 2% of GDP in 2027, or more than $80 billion. This would make Japan the world's third-largest military spender after China and the United States.
However, this policy has caused widespread discontent in Japan. With the impact of inflation, the cost of living continues to rise, and more than 90% of adults say that rising prices have affected their daily lives. At this time, the government asked taxpayers to increase taxes to buy weapons, which undoubtedly deepened popular discontent. Recent polls show that more than 60 percent of respondents oppose so-called "defense tax increases."
As the recession and inflationary pressures mount, it is expected that more Japanese people will join the ranks of opponents of the defense tax increase in the future, which will hit the government's domestic support even harder. At present, Kishida's approval rating has fallen to about 25%. Obviously, if the government does not change its aggressive defense policy in time and continue to expand its armaments, Kishida may become one of the "shortest-lived prime ministers" in Japanese history.