Japan’s economy suddenly fell into recession. It contracted for two consecutive quarters due to weak domestic demand. As a result, the country lost the title of the third largest economy in the world, giving this place to Germany.
Between October and December last year, Japan’s GDP fell 0.4% year on year. In the previous quarter the decline was 3.3%. At the same time, analysts, on the contrary, predicted an average growth of 1.4%.
Two consecutive quarters of decline are generally considered an indication that the economy has entered a recession.
Economists say the reason Japan lost third place was due to foreign exchange rates.
Due to the weak economy, the Bank of Japan cannot tighten monetary policy. By March-April he will try to end negative interest rates. But at the same time he promises to support an accommodative monetary policy.
The foreign exchange market has already reacted to this. Now the yen exchange rate is 150 to one dollar.
The past recessions in Japan were in 2012 and ’18. Then, too, there was a decline for two quarters in a row.
Let us remind you that the USA is considered the first economy in the world, China is the second.
