The International Monetary Fund (IMF) predicted that Japan’ nominal gross domestic product (GDP) will be reversed by Germany this year and move down one notch to fourth place in the world. There is also an impact of the yen’s depreciation, but some analysts say that the Japanese economy’s slump is reflected.
Citing IMF data, Japan’s nominal GDP this year is expected to fall 0.2% from last year to $4.23 trillion. According to the latest data, Germany’s nominal GDP is expected to rise 8.4% from last year to $4.4298 trillion, surpassing that of Japan. Nominal GDP is an indicator of the level of economic activity reflecting the inflation rate.
Japan’s economy is relatively strong, with real GDP rising 1.2% in the second quarter from the previous quarter, but nominal GDP based on the dollar is expected to decline due to a record-breaking yen depreciation. Last year, the yen-dollar exchange rate in the Tokyo foreign exchange market averaged 131 yen per dollar, but it is now approaching 150 yen.
In 1968, during the period of rapid growth, Japan overtook West Germany to become the world’s second-largest economy in terms of gross national product (GNP). The nominal GDP was also the world’s second-largest until the early 2000s, and the yen’s market price averaged about 105 yen per dollar at that time. However, in 2010, Japan ranked third, behind China, whose currency value has risen and its economy has grown.
The Nihon Keizai Shimbun pointed out that the decline in nominal GDP reflects the long-term economic downturn in the Japanese economy. This is because the nominal GDP growth rate from 2000 was 12.6 times in China, while it was only 1.1 times in Japan. The Japanese government first admitted in March 2001 that Japan was in a modest deflation, and the working-age population (15 to 64 years old) has also been decreasing since 1995.
According to the IMF forecast, India, which has become the world’s No. 1 population, will rise to the fourth-largest economy in 2026, and Japan will be fifth.