Japan's economy will be stronger in 2023, but its GDP will be overtaken by Germany and fall to fourth
In mid-February this year, the Japanese Cabinet Office officially revealed the answer to netizens around the world who are concerned about the macroeconomic pattern of various countries - that is, many institutions (including Japanese media and Nomura Securities) predicted that Japan's economic trend was stronger than that of Germany, but GDP was overtaken.
In 2023, Japan's economic trend will be higher than that of Germany
According to preliminary statistics, Japan's economy grew by 2.6% year-on-year in real terms in the first quarter of 2023, the highest point of the year, while the year-on-year growth rate slowed slightly to 2.3% in the second quarter before falling again to 1.7% in the third quarter.
In the fourth quarter of 2023, as predicted by major institutions, the momentum of economic growth will decline again under the influence of weaker consumption and investment, and the current answer is that it will shrink by 0.1% quarter-on-quarter, and the year-on-year growth rate will be suppressed at about 1%.
Nansheng is particularly emphasizing here: Japan's economy is still growing with a year-on-year growth rate of 1% in the fourth quarter of 2023. The "0.4% decline" refers to the quarter-on-quarter annualized rate, which is a "0.1% quarter-on-quarter decline (as shown in the chart below) magnified into a full year", so don't be confused.
The year-on-year growth rate of the economy in the first two quarters was more than 2%, and the year-on-year growth rate in the next two quarters was not less than 1%, and the economic trend for the whole year of 2023 is: year-on-year expansion of 1.9%, and it is the real improvement after excluding the factor of rising prices.
By comparison, Germany's economy grew by just 0.3% year-on-year in the first quarter of 2023, by 0.4% in the second quarter, by 0.7% in the third quarter, and by 0.4% in the fourth quarter – only in the first quarter it was fine-tuned growth, and the next three quarters were all down, falling into recession.
For the whole of 2023, Germany's economy contracted by 0.3% year-on-year – a real boost adjusted for inflation, and much less than Japan's 1.9% real expansion. In other words, Germany's economic activity is significantly inferior to Japan's.
However, Japan's GDP has been overtaken by Germany and has fallen to fourth in the world
The economic growth rates of various countries and regions reported by major media need to exclude the "price change factor", but when comparing the size of the economies of various regions, they are calculated according to the "market price of the current year and quarter", that is, the price change factor needs to be included.
After adjusting for price changes, Japan's economy will grow to 591.48 trillion yen in 2023, a nominal increase of 5.8%, while Germany's economy will be 4,121.16 billion euros, with a nominal growth rate of 6.3% - inflation, which will help Germany's GDP rise faster.
It's not over yet. The above data is calculated in yen and euros, which cannot be directly compared, and the exchange rate factor must be cited - according to international practice, it is uniformly converted to US dollars. In 2023, the euro appreciated by 2.7% against the dollar, while the yen depreciated by 6.4%.
As a result, Germany's GDP in 2023 expanded to $4.456 trillion in dollar terms, while Japan's GDP fell slightly to $4.21 trillion. As a result, Japan's economy was overtaken by Germany and dropped to fourth place in the world.
The Japanese media have repeatedly expressed their "unconvinced"
Japanese media emphasized that Japan's GDP is overtaken by Germany and overtaken by China are two different phenomena. During the period when China was catching up with Japan, China's real economic growth rate often reached 10%, and imports and exports, investment, and household income and consumption were all steadily increasing.
However, Germany's economy is declining in 2023, which is not at the same level as Japan's expansion of 1.9%. Germany's third-largest economy in the world has relied on its "greater ability to raise prices and the euro's outperformance of the yen" rather than a more active economy.
Japan's economy is actually moving slightly stronger than it was before the pandemic, while Germany has gone from being the locomotive of the EU's development to the "tail of the train", and has even been disparaged by the Economist as a "European patient". In other words, Germany's transcendence is precarious.
If the real level of development of the German economy cannot be effectively reversed in the next two or three years, after the CPI stabilizes and the euro exchange rate weakens again, the scale of the Japanese economy will most likely catch up with Germany. In this third position in the world, Germany is likely to be unstable.
Nansheng believes that the Japanese media's statement is very reasonable, but they may have forgotten India when they competed. This new developing economy is doing a lot of economic growth, and its GDP will overtake Japan and Germany in the next two to three years – and they will soon be competing not for third, but for fourth, and the loser will be fifth. This article is written by Nansheng, and reprinting and plagiarism are strictly prohibited!