LONDON: In the second half of 2023, two significant global economies—Japan and the UK—went into recession.
Japan’s economy declined by 3.3 percent in the preceding quarter, and the country’s GDP contracted. In contrast, the UK’s downturn coincides with the anticipated election of Prime Minister Rishi Sunak this year, who has pledged to spur growth.
UK fell into recession at end of 2023 after economy shrank 0.3% in final three months of year, figures show https://t.co/8SgHt0Mgri
— BBC Breaking News (@BBCBreaking) February 15, 2024
According to data from the Cabinet Office, Japan’s economy is no longer the third largest in the world, trailing only Germany’s, according to a report by BBC News.
The fresh data was predicted by economists to demonstrate that Japan’s GDP increased by more than 1 percent during the fourth quarter of last year.
The most recent numbers could still be changed because they represented Japan’s economic growth for the first time during that time.
A technical recession is often defined as two consecutive quarters of economic downturn.
The International Monetary Fund (IMF) predicted in October that, when expressed in US dollars, Germany will probably surpass Japan to become the third-largest economy in the world.
The IMF will not announce a shift in its rankings until both nations have released their final estimates of their rates of economic growth. In 1980, it started releasing data that compared economies.
According to economist Neil Newman, who spoke with BBC News, Germany’s economy was valued at $4.4 trillion in 2023, whereas Japan’s was estimated to be worth $4.2 trillion.
“The truth is it’s just not the news today that tells us we’ve got a technical recession”
Industrialist Juergen Maier highlights that there have been “11 different growth strategies” from the UK government in the past 14 years #bbcqt https://t.co/kWTrfdB0XM pic.twitter.com/VxEtFii4cm
— BBC Question Time (@bbcquestiontime) February 15, 2024
Mr. Newman went on to say that this was because of how weak the Japanese yen was compared to the US dollar and that Japan might move back up to the third rank if the yen strengthened.
During a news conference in Tokyo this month, Gita Gopinath, the deputy chief of the IMF, added that the yen’s about 9% decline versus the US dollar last year was a significant factor in Japan’s possible decline in the rankings.
Nonetheless, because Japan’s exports, like cars, are more affordable in foreign markets, the weakening of the yen has contributed to an increase in shares of some of the largest Japanese corporations.
Inconvenient time for the UK
According to official data, the UK’s GDP shrank by 0.1% from July and September before contracting by 0.3 percent in the three months leading up to December.
In relation to the euro and the dollar, the sterling declined. In a budget plan that was due on March 6, businesses demanded additional assistance from the government, and investors increased their wagers on the Bank of England (BoE) lowering interest rates this year.
According to figures released on Thursday, Britain and Japan are now two of the Organization of Seven major nations experiencing a recession, albeit one that is probably going to be mild and transient compared to previous recessions. Data on Canada’s GDP for the fourth quarter are still pending.
The UK’s GDP is just 1% larger than it was in late 2019, prior to the COVID-19 epidemic; among the G7, only Germany is doing worse.
One of Mr. Sunak’s main promises to electors last year was to keep the economy growing. With a track record for economic acumen, his Conservative Party has ruled British politics for the majority of the last seven decades. However, surveys suggest that Employment is increasingly trusted when it comes to the economy.
Analysts have predicted that British households will experience their first decline in standard of living between national elections since the end of the Second World War.
The GDP numbers, according to Ruth Gregory, the Deputy Chief UK economist at Capital Economics, have more political than economic relevance because voters are scheduled to elect representatives in two constituencies on Thursday.
SOURCE: DAWN NEWS
