Tokyo: Japan’s economy unexpectedly slipped into recession after shrinking for a second quarter due to anemic domestic demand, prompting some central bank watchers to push back bets on when the nation’s negative interest rate policy will end.
Official data released on Thursday revealed that Japan’s economy grew by 1.9 percent last year, but it slipped to the world’s fourth-largest economy, overtaken by Germany, AFP reported. The decline was primarily attributed to a significant fall in the value of the yen.
According to government data, Japan’s nominal gross domestic product (GDP) in dollar terms for 2023 stood at $4.2 trillion. In comparison, Germany, with a GDP of $4.5 trillion, secured the third position globally.
This shift in rankings is notably due to the yen’s depreciation, which slumped over 18 percent against the dollar in 2022 and 2023, including a seven percent drop last year, it said. The Bank of Japan’s decision to maintain negative interest rates also contributed to the currency’s decline.
According to government data, Japan’s nominal gross domestic product (GDP) in dollar terms for 2023 stood at $4.2 trillion. In comparison, Germany, with a GDP of $4.5 trillion, secured the third position globally.
This shift in rankings is notably due to the yen’s depreciation, which slumped over 18 percent against the dollar in 2022 and 2023, including a seven percent drop last year, it said. The Bank of Japan’s decision to maintain negative interest rates also contributed to the currency’s decline.
Only one of 34 surveyed economists had pointed to a contraction in the quarter, with the consensus at 1.1% growth. Overnight swaps after the result showed markets pricing in around a 63% chance of the Bank of Japan hiking by April, down from 73% a day earlier.
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