Japan in Recession as Price Increases Outpace Wages

Japan is one of the world's largest economies. However, it is currently experiencing a recession.

This is indicated by negative economic growth for two consecutive quarters.

According to a report from the Japanese Cabinet Office, in the third quarter of 2023, their economic growth was minus 3.3% (quarter-to-quarter, annualized).

Then, in the fourth quarter of 2023, it again reached minus 0.4% (quarter-to-quarter, annualized), as shown in the graph.

According to the New York Times article, "Japan's Economy Slips Into Recession and to No. 4 in Global Ranking" (February 15, 2024), several factors triggered Japan's recession.

These factors include slowing corporate spending, declining consumer spending, high inflation, and a weakening yen.

According to Shinichiro Kobayashi, an economist at Mitsubishi UFJ Research and Consulting, the Japanese economy is also currently polarized due to an imbalance between rising prices and wages.

"While corporate profits are soaring, prices are also rising, but wages are not keeping pace, and consumers are reluctant to spend," Kobayashi said, as reported by the New York Times (February 15, 2024).

"The big question is whether Japanese workers will be able to get meaningful wage increases this year. The decision rests with corporations," he added.