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Japanese Economy Struggles With Recessions

This is a syndicated repost published with the permission of Statista | Infographics. To view original, click here. Opinions herein are not those of the Wall Street Examiner or Lee Adler. Reposting does not imply endorsement. The information presented is for educational or entertainment purposes and is not individual investment advice.

Japanese GDP shrank by an annualized 27.8 percent in Q2 of 2020, marking the third consecutive quarter of negative growth and the biggest decline on record. In fact, the Japanese economy has been no stranger to recessions even before the coronavirus outbreak.

The country experienced three albeit milder recessions between the COVID-19 pandemic and the global financial crisis (when looking at quarter-on-quarter growth). The first was caused by the devastating earthquake and tsunami that hit Japan in 2011, while the other two and single negative growth quarters can be chalked up to the long period of stagnation the Japanese economy has found itself in since its asset price bubble burst in the 1990s.

In the aftermath of the crisis, Japan amassed a mountain of debt that it carries to this day. An aging population and a shrinking consumer market are other factors making it hard to revive the Japanese economy, as is the country’s continued reliance on exports and tendency to invest overseas rather than at home.

Prime Minister Shinzo Abe promised the country relief through his “Abenomics” economic revival program but hasn’t lifted the country out of stagnation yet. The Abe administration significantly eased monetary policy and increased government spending, while simultaneously aiming for structural reforms to make the Japanese economy more competitive. Some of the reforms, for example getting more women to join the workforce, have been successful. Others, like increasing the inflow of foreign workers, still lack acceptance.

This chart shows the annualized quarter on-quarter real GDP growth in Japan between 2008 and 2020.

Japan GDP quarter-on-quarter annualized

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