In the fourth quarter (October to December) of 2023, Japan's gross domestic product decreased by 0.1% compared to the previous three months. This is stated in a government report published on Thursday, February 15.

According to the Cabinet of Ministers, from July to September 2023, the dynamics of Japanese GDP was also negative. During this period, the figure decreased by 0.8%.

Thus, the economic decline in the Asian country has continued for two quarters in a row. This state of affairs is traditionally considered to be the beginning of a technical recession.

“One of the reasons was that domestic demand in Japan decreased amid record inflation and a depreciation of the yen. The fact is that the country imports a significant part of its energy resources and food from abroad, so the weakening of the national currency has led to a sharp increase in the price of fuel, food and all other imported goods for consumers,” Freedom Finance Global analyst Vladimir Chernov explained to RT.

In addition, an additional challenge for Tokyo was the general slowdown of the global economy in 2023 and, as a result, a decrease in consumer activity in countries importing Japanese products. Sergei Suverov, associate professor at the Financial University under the Government of Russia, pointed this out in a conversation with RT.

“The decline in global demand for goods has led to a significant decrease in the level of Japanese supplies to foreign markets. This largely plunged the country into recession,” Suverov noted.

It is noteworthy that Japan was not the only G7 economy that entered a recession at the end of last year. Thus, a decrease in GDP in the third and fourth quarters of 2023 (by 0.1 and 0.3%, respectively) was also recorded in the UK, as reported by the country’s national statistical service on Thursday.

“In the United Kingdom, consumer demand has also decreased due to accelerating inflation and falling real incomes. At the same time, to combat rising prices, the Bank of England set high interest rates, which also became a trigger for the recession,” explained Sergei Suverov.

Earlier, another G7 country, Germany, admitted that its economy had plunged into recession. As calculated by the Federal Statistical Office of Germany, according to the results of the entire 2023, German GDP decreased by 0.3%.

“Germany has been hit hard by the consequences of anti-Russian sanctions. In particular, after abandoning our hydrocarbons, Berlin had to buy raw materials from other suppliers, but at higher prices. This, in turn, had a negative impact on Germany's production capacity. Moreover, restrictions against Moscow also affected Britain and Japan in the sense that energy resources for them also became much more expensive,” Suverov added.

  • Leaders of G7 countries

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  • © Michael Kappeler / Picture alliance

In different directions

Let us recall that from February 22, 2022, the G7 countries, together with their allies, began to introduce large-scale economic sanctions against Russia and during this time they have already approved almost 16.6 thousand various restrictions. Of these, about 1.8 thousand were approved by EU states, a little more than 1.7 thousand by the UK, and over 1.2 thousand by Japan (according to the specialized database Castellum.AI).

In addition to energy, restrictions affected aviation, trade, the financial sector and the banking industry. Along with this, almost half of the country’s gold and foreign exchange reserves were frozen (worth $300 billion), and many international companies announced their departure from the Russian Federation.

Under these conditions, some analysts initially predicted a collapse of 10-25% in the Russian economy in 2022. Nevertheless, the real decline was only 1.2% and turned out to be even less deep than in the pandemic year 2020 (2.7%) and the crisis years 2015 (2%) and 2009 (7.8%), according to materials from the Ministry of Economic Development of the Russian Federation and International Monetary Fund.

Moreover, earlier specialists from the IMF and other international organizations assumed that in 2023 Russia’s GDP would continue to decline. However, the economy managed to fully recover the sanctions losses and grew by 3.6%.

Thus, the country not only withstood unprecedented external pressure, but also continued to develop confidently. President Vladimir Putin announced this on February 2 at the “Everything for Victory!” forum.

“The entire economy has demonstrated stability... We were predicted, as you know, to decline, fail, collapse, that under the pressure of sanctions we would retreat, surrender, fall apart. I want to show a well-known gesture, but I won’t do it... They won’t succeed. And our economy is growing, unlike their economies, and today... in terms of purchasing power parity (PPP)... it has become the first in Europe, the fifth in the world. And this process will increase,” the head of state emphasized.

  • AP

  • © Alexei Danichev / Pool Sputnik Kremlin

Let us explain: GDP at PPP is the total value of all goods and services produced, calculated taking into account differences in price levels and exchange rates in different countries. It is believed that this indicator better reflects the real situation in the economy.

According to the World Bank, back in 2017, the world's five largest economies by PPP were China, the United States, India, Japan and Germany. Sixth place at that time was occupied by Russia, and seventh by Great Britain. However, to date, the United Kingdom has fallen back to tenth position, behind Indonesia, France and Brazil, while the Russian Federation has moved into fifth place, ahead of Germany.

Moreover, taking into account recent trends, Russia may rise even higher in the global ranking in the foreseeable future. This point of view was previously expressed by the country's Minister of Economic Development Maxim Reshetnikov.

“In principle, speaking more broadly, we are looking at the Japanese economy. We do not have such a big gap with them, and if the differential in growth rates remains... then, in principle, we can say that in the medium term, within three to four years, we are quite capable of overtaking comparable the size of the Japanese economy,” suggested the head of the Ministry of Economic Development at a meeting in mid-January.