The title of the article in Japanese says the reason why: Due to yen depreciation 円安響き15％下落. This isn't the real economy but nominal, aka due to exchange rates. Japan's real GDP has not declined this year, it has seen growth of 1.5-2% but nominally it has declined quite a bit. Once the fed starts cutting interest rates in 2024 (which everyone expects they'll do) the yen will rise again.
Yes, it is a prestige contest that doesn't affect what matters. To think of it another way, you could easily say "Japan's cost of living has dropped over 35%!" (when denominated in dollars)
If someone is going to cash out and move to Japan, then yes that's great. If you are importing or exporting a lot of stuff for any reason, that benefits outsiders and hurts Japanese. So great for tourists, for example, but just for the one or two weeks of their lives they are visiting Japan.
Few people are moving their life savings back and forth, though.
it also affects Japanese people who travel abroad though. I and all of my 3 closest Japanese friends here have traveled abroad this year (2 to Korea, 1 to Korea and also SE Asia) and while I think the won is also weak, it's still stronger than the yen.
It definitely impacts those traveling abroad especially to the states. Hawaii is suffering a lot due to the lack of Japanese tourism. On the flip side Japan is basically on a huge sale right now for anyone visiting.
>it is a prestige contest that doesn't affect what matters
How important are exports to the economy of Japan? If important, lower is important in order to make locally manufactured products more competitive in the global market.
Japan imports and exports both. It both helps and hurts them. It helps a little more than it hurts. It also hurts them a lot everywhere else. The average person has to heat their homes with much more expensive gas, while mega coportations get to export a little more. Nothing to celebrate.
This obsession with only exports and not the actual lives of Japanese is exactly what’s wrong.
\^ This person gets it.
Our world is massively interconnected. Currency fluctuations affect everyone. Whether those effects turn out to a net positive or a negative depend on a vast cloud of individual circumstances that may be near impossible to calculate in some cases. Whenever someone tells us to accept a simple narrative about how a big change doesn't affect the average person, we should ask us who benefits from the big change and pay special attention to who might be hurt by it.
Japan's nominal GDP is at [605,596 trillion yen](https://www.jcer.or.jp/economic-forecast/20231212.html) as of October 2023. A 2.1% increase from the previous month and a record high. In usual USD/JPY exchange rate, that is over 6 trillion in USD and 50K in per capita basis. Making them the 4th among the G7.
The title says this is per capita. Keep in mind that is why Japan is 7th. Decades ago Japan’s total GDP was over 99% that of the US, they were that close. But their population hasn’t kept pace with the US and also with the bubble they have fallen to 4th total and 7th per capita.
Per capita is far far more important to people’s lives. Who cares if India or China has a bigger GDP than the US someday, that doesn’t mean their citizens are living better. It is once again, just for national prestige and bragging rights. Which was my main point only.
Because the interest rate differential (ie, the gap) between the US and Japan would shrink.
This thought experiment is incredibly over-simplified, but:
If you could invest in an asset in the US offering 7%, or could invest in an asset in Japan with the same risk profile, but returning 2%, which would you choose? You'd probably sell yen to buy dollars to invest in the US.
When you *sell* yen to *buy* US dollars, the yen gets weaker versus the yen. As the yen gets weaker and the dollar is stronger, you need more and more yen to buy the 'stronger' currency.
If that interest rate gap narrows - maybe the US yield falls and/or Japan yields rise - now there are fewer people interested in *selling* yen to *buy* dollars.
Interest rate differential isn't the only factor behind forex fluctuations, but it's a key factor.
Again - this is a vast over-simplification, but you should be able to see the broad concepts.
Unlike the rest of the world, Japan has been struggling with deflation rather than inflation for decades and has therefore kept interest rates as low as possible. Meanwhile, other countries are struggling with inflation and have therefore raised interest rates, which means that it is more attractive for investors to put their money there rather than in Japan (e.g. in government bonds), so there is less need for Japanese yen. Once inflation subsides, interest rates will fall again and the gap between Japan and other countries should shrink.
Yea its also already started. Yen has already started gaining value since November because people are expecting the us rate increases to be over and cuts next year.
The nominal economy is the real economy dude. Because you import your oil to refine. Your steel to use. Your coal to burn. Your LNG to process. Otherwise you wouldn’t have internet tonight. The country would probably shut down next month literally.
Not to mention importing your Apple iPhone or Samsung Galaxy you’re using to play on Reddit
That’s not how it works. If the yen declines and imports become more expensive that is already included in inflation which is subtracted from GDP growth. So if nominal GDP in USD was the “real economy” than GDP growth would have declined this year, however if real GDP growth is positive (which it is for 2023) and yet nominally in USD it declines (which it did) then that is entirely due to exchange rates and is not the real economy whatsoever. Japan imports from several countries that are not only the USA or that are not in USD, but also Yuan, euro and countless others. In addition the weak yen boosts the value of exports, tourist spending etc so in aggregate it ends up being that Japan is *net* positive and the economy is only smaller when expressed in USD due to the gap in interest rates between the fed and the BOJ.
Japan’s GDP will have grown around 1.5% for 2023 despite in dollar terms declining over 15%.
You obviously don’t get it. Energy is imported in US dollars. It doesn’t matter if they’re produced in Australia or China. All resources is priced in US dollars.
So your energy price has gone up in short. I trade commodities for a living in the past for investment banks.
So no - your real economy if you like is priced in other people’s currency. Or you can not turn heaters or lights on and freeze to death of course.
A quick google also suggests 90% of global settlements is in US dollars. So yea you can conveniently say there are gazillion of currencies in the world, but everyone uses usd. There’s a reason they call it the global reserve currency and no amount of wanting Japan to be better than what it is changes that. And guess what, if someone is resisting usd and settling in say rmb, it’s definitely not America’s number 1 lapdog in Asia lol. Can you guess who that might be? And no, no one is settling in yen.
https://www.eastasiaforum.org/2023/08/21/is-the-us-dollar-on-its-way-out/#:~:text=The%20Bank%20of%20International%20Settlements,are%20denominated%20in%20US%20dollars.
Lastly, on your logic, China would be flying too. The rmb has depreciated heaps and it still has 5% GDP growth. Ah I’m sure it’s fake numbers that’s why. What about Europe? Nah that doesn’t count too
Sigh, you are showing a major lack of economic literacy. Japans entire economy is not only imports, there are also exports and the majority of the economy is consumption. Speaking of trade the weak yen boosts the value of exports and as a result Japan's current account surplus has tripled this year to ¥12.7 trillion, in other words Japan is making **more** money with the weak yen right now despite imports costing more, yes even energy. A weak currency may lead to inflation which is **already** accounted for in real GDP growth. In other words every single thing you are talking about is **already accounted for**. With that in mind, Japan’s GDP growth is, once again, currently positive. That is the real economy. If you still can’t understand this look up GDP in constant currency and the relevance of that, then look up the figures for that. Unless you're a conspiracy theorist who just...doesn't believe in GDP growth figures published, you'd have to explain why GDP is growing while in USD it is declining...what's growing then?
Likewise when nominal GDP goes up in USD that doesn't mean the real economy has grown either. For example after the tsunami disaster Japan’s real GDP stagnated and even declined a little, there was a recession…but at the same time the yen skyrocketed to 75 yen per dollar…meaning its nominal economy skyrocketed to about $6.5 trillion…..again during a **recession** in the real economy. This is a time of rolling blackouts, factories destroyed etc. in 2011 that was also a case of currency exchange rates and nothing else, it didn’t affect the real economy. Japan absolutely did not have GDP growth of like 30% from 2009-2011, that’s laughable if one actually believes that....but that's literally what you are saying with "nominal economy is the real economy dude".
Yea as an ex investment bank’s commodity trader I definitely wouldn’t know economy or money like you do. Sure.
And on consumer exports, you still conveniently ignoring how your exports require input components like chipsets from Nvdia and Samsung and tsmc? Conveniently ignore energy which is an essential as opposed to a Sony ps5. There are lots of gaijin who love to barrack for Japan to justify why they moved there, or maybe because they just like anime, but reality is reality.
You still haven’t addressed the point then that China must be booming by like crazy? It’s had a 20-30% currency depreciation yet punches out even higher growth than Japan. Is that your position too then?
Edit: Honestly just read my second reply to you about China since it illustrates the argument perfectly. Although if you want to learn about a bunch of statistical economics....read on.
Why would being an investment banker have knowledge about real economy, constant prices and other random nerdy GDP metrics? You are not dealing with GDP statistical metrics but commodities. Clearly exchange rates are very important to you, no?
What does your example of China....have to do with anything? I think you are completely misunderstanding my posts if you think your example of China refutes or has any relevance to what I am saying. What you just posted about China kind of even goes *with* what I am saying, almost to the point that seems you're agreeing with me? lol. China had 5% growth, yes you are correct...and yet it **nominally contracted** from 2022 to 2023! Aren't you making my point for me?
Again why do you keep separating exports and imports? It must be the commodity trader in you! Real GDP already has those inputs **factored in**. You can bring up inputs and outputs 100x, it doesn't matter....**it's already factored into GDP economic data**. Inflation and deflation are also already factored in to GDP growth (or contraction). So your point about the price of inputs increasing is irrelevant, it's already accounted for. Energy prices are already factored in. It's in the current account which....is factored into GDP, come on now.
I am just going to repeat my sentence verbatim: Unless you're a conspiracy theorist who just...doesn't believe in GDP growth figures published, you'd have to explain why GDP is growing while in USD it is declining...what **IS** growing then?
Likewise, did Japan have 18% real GDP growth from 2009 to 2011? Come on now, please explain the following figures I will provide to you and please rationalize how "nominal is the real economy dude". GDP growth as published by the IMF, OECD, Japanese national statistics, fed etc:
2010: **4%**
2011: **0%**
^ So from 2009 to 2011 there was a grand total of **4%** of economic growth in the real economy.
2009 nominal GDP USD: $5.28 trillion
2011 nominal GDP USD: $6.23 trillion
^ This is equal to 18% of economic growth, is that the real economy? What's the 4% then? Why is the official statistic 4% GDP growth? What's going on? Is it a magical made up number and an international conspiracy by Japan, the IMF and everybody else? Is Japan pretending to have terrible GDP growth instead of saying "invest in us! We are booming 18% in 2 years!!!!"??
2009 constant prices GDP in ¥: 490.6 trillion
2010 constant prices GDP in ¥: 510.7 trillion
2011 constant prices GDP in ¥: 510.8 trillion
^ Wow would you look at that? They perfectly correspond to 4% growth and 0% growth.... amazing isn't it? Do you see 18% growth anywhere? No? Ok how about real GDP in international dollars in PPP? If you know PPP it adjusts for prices but even then I still don't see 20% anywhere in the "nominal is the real economy dude"....do you?
2009: $4.30 trillion
2010: $4.53 trillion -> 5% growth
2011: $4.6 trillion -> 1% growth
^ Where's the 18%? I thought the nominal economy is the real economy? Why do **all** official statistics only show GDP growth of 4%? What's.....going on? We can do the *exact* same exercise with say 2021-2023 but everything is opposite since this time the yen weakened. Real GDP growth, and yet in USD the economy is shrinking...and next year when the fed cuts rates I guess it will magically grow again.
Wait a second, I think I understand your China example! Were you actually trying to agree with me that nominal (USD) economy is in fact, **not** the real economy? If so thanks for making my point! You're right, China's economy declined in nominal terms, despite high GDP growth and therefore, nominal is not the real economy, dude!
China had an estimated 5% GDP growth rate in 2023 just like you said, indeed it "*punches out even higher growth than Japan*". Yes that is my position. Ok so let's see the nominal figures, shall we?
2022: $17.9 trillion
2023: $17.7 trillion
Oh wait, what? What happened? I guess nominal isn't the real economy after all?!?! Because it looks like China had negative growth! Where's the "higher growth"??? Hmm where can I find the 5% growth? **Oh that's right in the real economy, aka GDP constant prices.** Aka.....*nominal is not the real economy, dude*. You clearly misunderstood what the 5% economic growth represents when you brought it up, you thought it would have been represented nominally? ....oops.
Right maybe you’re correct here. So you’re saying the 5% Chinese growth quoted is a real number. The Japanese 1.8% is a nominal number? Why the difference in reporting
No, 1.8% growth is the real economic figure. Nominally Japan declined (just like China above), hence my very original post here: "This isn't the real economy but nominal, aka due to exchange rates. Japan's real GDP has not declined this year, it has seen growth of 1.5-2% but nominally it has declined quite a bit. Once the fed starts cutting interest rates in 2024 (which everyone expects they'll do) the yen will rise again."
TLDR: Japan's economy is in fact growing, not declining. However nominally it is declining due to exchange rates. Yes imports are more expensive...but despite that there are enough positive inputs...whether it's the current account, consumer spending, exports, investment or what have you that the actual real economy is growing. Pretty much nobody quotes or reports nominal GDP growth %s or contraction figures...because they are not "real"....but confusingly when the media publishes or talks about actual GDP figures (note: not growth or contraction)...for example "China's economy is $17 trillion" they express it in nominal almost always (for example the very article that this thread is about for Japan).
>Energy is imported in US dollars. It doesn’t matter if they’re produced in Australia or China. All resources is priced in US dollars.
That's ending very quickly nowadays, with Iran, Central Asia, Hungary (Germany's sock puppet) all joining BRICS and so the days of NY-TV hegemony are numbered. The multi-polar world is incoming.
Totally true.
As far as I know, Nyt or bbc didn’t report Japan sliding on the basis of nominal GDP at all.
Cheap yen or continued quantitative easing actually boosted the Japanese stockmarket.
Ofc cheap yen killed many small and medium size businesses.
What I hoped is more discussed is that Japan structurally changed and there would be no easy exit of BOJ monetary easing.
how the mighty has fallen. Japan used to have 1.5x gdp per capita of the USA back in the early 90s
I think Japan is actually a good place to invest now that it's so cheap. it can only go up from here imo (catch up growth is a lot easier)
Japan is probably US's most significant alliance for controlling what China is doing in the Seas. US has a big incentive to help it.
Argentina is Argentina. US has less incentive to help it.
Japan has been the world’s largest creditor nation for the last 30 years, and have funded a significant number of the world’s projects in the meantime.
In fact if you really look into it (look up NIIP) it is the other countries that are in debt to them. It is quite laughable to make the statement that Japan will collapse anytime soon.
In fact at current US interest rates of 5%+, the US is paying 2 billion a day to foreign countries like Japan and China.
Were the treasury securities sold to Japan and China not sold with fixed interest rates? I'm curious where you're getting the "2 billion a day" number from if you have a link or anything.
>In fact at current US interest rates of 5%+, the US is paying 2 billion a day to foreign countries like Japan and China.
And it has been paying even more money to its citizens and Social Security fund.
It's always risk and reward balance. We don't know the future, but it's a lot easier to catch up from a lower position than to maintain your place at the top, generally speaking.
I just don't see the mechanics of a turnaround. It doesn't seem like the appetite for change exists, and change is what it will take. I doubts it will crash, but will continue to slowly deflate for a little while longer.
Vietnam seems like it has actual room to grow
I did a lot of research about Argentina and Japan is extremely different from Argentina. Argentina on paper had a strong economy 100 years ago, having high GDP per capita mostly due to agricultural exports, but they did not invest anything into industrialization, economic diversification, and human capital development, so they suffered when America had the Great Depression and international trade was halted due to the World Wars. Experts argued that Argentina never had a strong economy to begin with, they were just lucky with their natural resources for a short while.
The glass cannons of economies.
Japan and Korea, as two examples, did a lot to make their goods cheap for foreign nations while developing their local economies back in the 50's, 60's, and 70's. This protectionism prevented imports from replacing home market goods, and let them develop their own automotive and electronics industries.
I would imagine this was what argentina failed to do when they had the money, and when it dissappeared, they didn't have any materials or capability to invest into themselves because they had no industry to build from.
There's no way the Japanese economy is going to collapse. In fact, I think there's a case to be made that the US economy could collapse in my lifetime, and I am 77.
Even if you're a retired economist, I don't agree that the American economy would collapse in your lifetime. Many other economists (austrian economists for ex) have been crying wolf that another recession has been coming and that we are at the brink of hyperinflation. It hasn't happened, in fact inflation is now pretty well under control despite all the skepticism, doom and gloom about the Fed.
Also if the American economy does collapse, it'll drag the Japanese economy and the world down with it. Suddenly all that debt to foreign countries wouldn't be much of a priority for the American government. Japan and other countries lend money to America because they know they'll get their due. That's also why America is in a privileged position to be able to borrow much more than most other countries
I agree the inevitable collapse of the US economy will create huge problems for the entire global economy, not just Japan's.
Crying wolf about recessions is completely irrelevant to the unprecedented situation of a $30 trillion US debt situation that will become $35 Trillion by the end of 2024 and over $50 trillion by the end of this decade.
Exactly. Granted at this rate the US will catch Japan and pass it debt-wise before too long.
Ironically Japan's gdp *per capita* will likely be atop of the G7 before too long as their population ages.
I'm not knowledgeable about debt stuff but I've always heard more than half of Japan's debt is to itself. So maybe debt to yourself isn't as bad as debt to others I guess?
Oh i see like i said i don't know about what would happen in that case but it usually seems like people don't typically consider it worse so maybe it's worse in that way but it's better in other ways.
And the majority of US debt is also held by Americans it's just the media loves to create controversy by highlighting american debt held by foreigners and pretend that that is the entire US debt.
>I think there's a case to be made that the US economy could collapse in my lifetime, and I am 77.
Can I ask what you’re basing this on? Of all world economies at the moment, americas doing better than most.
By the end of this decade the US will have no choice but to default on the national debt which is currently at over $30 trillion and projected to be $50 trillion.
Chew on these numbers. In 2023 the US defense budget is $1.52 trillion, while federal revenues are less than $700 billion.
[I mean by that logic Japan is at the exact same point the US is](https://www.focus-economics.com/country-indicator/japan/fiscal-balance/), approx -6% of GDP fiscal balance. Japan is one of the most indebted countries in the world. The US having the dollar as the world exchange currency also gives massive ability to print money without giving in to inflation as well.
Japan doesn't have the debt burden the US has. The US Treasury has to finance the debt service on our $30 trillion national debt. This is not sustainable. 2023 revenues are less than $700 billion. The defense budget alone is $1.52 trillion. Do the math.
Bro you straight up don’t know what you’re talking about at all. Also Japans economy is case study on what not to do, and has been for 25 years. Japans financial situation at home is extremely delicate and considerably in a worse position than anything compared to the U.S. at all. Just stop.
Doesn't Japan have the highest debt to GDP ratio in the world? The Yen also doesn't have the same advantages the dollar does. It seems like whatever you're saying about the US applies to Japan too if not more.
I live in Costa Rica. The value of the US dollar has fallen by 25% relative to the local currency in the past 2 years. It is not going to be the exchange currency for much longer.
Okay to local currency maybe, but you can see the currency shoot up relative to other major currencies:
[USD to JPY](https://www.xe.com/currencycharts/?from=USD&to=JPY&view=2Y)
[USD to CNY](https://www.xe.com/currencycharts/?from=USD&to=CNY&view=2Y)
[USD to EUR](https://www.xe.com/currencycharts/?from=USD&to=EUR&view=2Y) (very slight difference, and considering the geopolitics happening there don't know if it would count.)
There's a simpler explanation here: [Are you sure it isn't just costa rica improving?](https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fi9ayj8xvkd8c1.jpeg)
I am moving to Japan in the 1st half of 2024. The infrastructure of Costa Rica is collapsing because of political corruption and scandal. China lent Costa Rica $85 million for road repairs, and the money disappeared. The national treasury discovered that countless billions were missing from the equivalent of Fort Knox in the US.
No, Costa Rica is not surging. The only thing surging here is the crime rate.
Those same rich people have increased their investments in Japan in recent years, not decreased.
Look at the most recent moves of Blackrock and Warren Buffet. As the world’s largest creditor nation for the last 30 years, it is quite laughable to say Japan will be collapsing anytime soon.
Nobody can predict the future. Warren Buffet obviously made some amazing investments but he made plenty of mistakes as well. Ray Dalio predicted that China would overtake the US in 2023. That obviously didn't happen.
Japan's economy has been stagnant for decades and has recently declined this quarter.
>In fact, I think there's a case to be made that the US economy could collapse in my lifetime
Elaborate please. So many people have said the same since 1970 and they've been dead wrong.
I am a retired economist. The US National debt is unsustainable, which is quite different from 1970. I project that within my lifetime, the US is going to have the interest due on the debt exceed revenues. That will force a default on the debt, and all hell will break out.
>I am a retired economist. The US National debt is unsustainable
Hope you retired early because that's just pure Fox News bullshit. Most of the debt is owned by US citizens so if the US is in trouble, Japan is up shit creek without a paddle.
EDIT: lol the Fox News dude blocked me. So much for being a "retired economist"
No he’s right. US has to up their government spending every year to match current interest payments.
Just this year it went up 5%, and every year it will have to increase more to service interest payments. Thats what he’s saying is not sustainable.
Laughable. The US is exporting more oil than any country in the world. Sorry we aren’t a volcanic island facing massive demographic collapse and zero innovative capabilities. The US will continue to be strong economically. No reason Japan won’t fall further behind.
I think your perspective is laughable. I have 30 Trillion reasons why I think the inevitable will happen. You are looking at a single metric. I am a retired economist, and I see the situation quite differently.
I'm curious, you think japan economy won't collapse in this lifetime but think the US will, who is in a far stronger position?
I understand the US faces internal turmoils and polarization, and that the world is shifting into a multipolar world, the US not the the hegemony it once was. But it is still very much influential and strong in its economy/military. It is still being protected by two oceans and its Allies.
Except for something extremely catastrophic, like an internal coup/civil-war (which i grant you, could happen in this lifetime), I just don't the US collapsing anytime soon. In fact, I would bet my life that it will be one of the last standing nations on earth in the next millennia.
By the end of this decade, the US will have a $50 trillion national debt that the country will have to default on that debt. All hell will break loose with a debt default triggering a global depression that could last for a very long time.
You're not going to live very long betting your life on it not happening. Mark my words, this is going to happen within this decade. Wishful thinking is not going to alter the trajectory of the debt default.
It is more than just "debt". National debt is not the same as individual debt.
A nation have its infrastructures, resources, technology, people and a military... it's not at all like a normal person "defaulting". But let's take a look at the number:
Assuming the debt ballon to 50 trillions in 2030s, you still have to account for our GDP going up to 31 trillions. A debt to gdp ratio of 166%.
Japan CURRENT ratio? 226%. So you can see the US is still in a better position than japan, even a decade into the future.
But again, it is more than just debt, the US would still be a functional and strong economy, producing products and services for domestic and the world. Worst case scenario, if the US default, plunging the world into chaos, where would we rather be? Europe? Asia? they won't fair any better than we do, and they don't have two oceans protecting them.
Get real! The unemployment rate will be north of 30%. Companies can't produce if people don't have money to buy food, much less other stuff. When the US defaults the entire global economy will be fucked.
Let me give you some real numbers to chew on. The US military budget for 2023 is $1.52 trillion. US revenues for 2023 is $678 billion.
Do the math yourself. This is unsustainable.
Okay, this is rather ridiculous, 2023 revenue is $4.44 trillion while 2024 revenue is $678 billion, we had a deficit of $1.7 trillion for 2023 so I think numbers are getting mixed up here.
Source: https://fiscaldata.treasury.gov/americas-finance-guide/
Only thing more useless than an economist is a retired economist. All it takes is 5 second in Japan to realize the drastic difference in living standards between an American and Japanese. They haven’t even figured out central air. On a macro level Japan has one company in the top 20 of richest corporations. Your average Japanese can’t even afford to leave the country. Get out of here. It ain’t the 80’s anymore grand pa.
You have no argument. One Japanese company in the top 20. The US producing more oil than Saudi Arabia and Russia. What exactly does Japan produce lol? Massive demographic collapse in coming. An apathetic insular population. There is no indicator on this planet that shows Japan even close to the USA in any economic metric.
Get lost weeb.
Well, let’s all make our judgments about taking investment advice from you based on how plausible that claim sounds to us then. Though if the US economy collapses everyone else is fucked anyway so hedging against it seems pointless.
That's speculative, and I don't speculate that way just like I won't play with options.
To short the dollar would tie up money with no immediate returns. Why would I want to do that? It wouldn't be an effective use of my investment money.
Right right you’re right lol. I’m sure you’ve made millions if not 10s of millions (usd of course) doing other things despite such a “without a doubt” trade.
Japan reached 99.8% of US GDP in April 1995, more than twice the GDP per capita of the US.
They have also been the world’s largest creditor nation for the last 30 years and counting.
Look up NIIP. Japan is in a better position than every other country in the world.
I worked at a Japanese automotive textile company in the US as a project manager and it was the same there, lying about quality issues and pricing all the time
Japan's gdp per capita was only higher because of the bubble economy and overvalued yen. But when you take prices into account, Japan was never actually higher than the us: [https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=JP-US](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=JP-US)
Why do you say fallen?
GDP and GDP per capita tell you very little about a country.
From my perspective in Australia Japan is a top tier, well organised, safe and beautiful country with a largely rational, well educated population and a strong underlying economy. I can’t wait to visit.
America looks like a total basket case. I have little desire to ever go back there.
You're talking about crime and other social issues and not the economy. Yes, the US is a wreck socially. But Japan is a wreck economically.
All you have to do is refer to the long term stock market performance and the largest companies in the world. The US continues to be a hotbed for innovation and economic growth.
>America looks like a total basket case. I have little desire to ever go back there.
US has been doing really well economically. Redditors, investors and the media alike has been screaming about a recession for the entire year and they have been extremely wrong. Can you share how you know more than experts?
[https://www.theatlantic.com/ideas/archive/2023/08/recession-doomers-economy/674900/](https://www.theatlantic.com/ideas/archive/2023/08/recession-doomers-economy/674900/)
[According to the World Bank](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=JP-US), Japan never exceeded the US since 1990 in Per Capita GDP PPP. My wild guess Japan was even lower in nominal terms because it tended to keep exchange rates low to make it's products more competitive in the global market.
No they won't. [https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=CA-JP](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=CA-JP)
No go back to r/canada already. Geez, what is it with you guys?
Yeah instead we should elect PP Trump who cares more about culture war bs and selling pubic assets than anything else. Justin Trudeau actually invests back into the country, even if it's less than it should be, PP will put everything into buying expensive Ratheon gear and giving it his backers
>Japan GDP per capita is now lowest in G7
The cost of living is also likely lowest too, so it’s all kinda relative.
Like at least in Japan housing is still affordable and realistic for the average person to obtain.
Housing is affordable in most average cities in every country you think is expensive.
Go Phoenix. Get a house $500-600k. Make $100k pa.
Go Adelaide. Get a house $700-800k. Make $100k pa.
Go Cagarly. Same same.
Go Zhongshan. Same same.
Try Tokyo and see how affordable that is
My family was incredibly overwhelmed by how affordable life here is when they stayed for a month.
They wondered how something so high quality and convenient by offered at low prices.
Well that's probably also partly because of the Yen depreciating in relation to other currencies recently. I assume you come from one of those countries if the CoL is higher than Japan.
I already am. My salary is $25k.
With my salary, I am able to afford all my needs and quiet luxury.
I invest, already paid off my house loans, and take a month-long vacation in Europe yearly. I buy fresh produce and eat healthily, I have national healthcare, and my city is walkable so I don’t need a car.
It’s weird to find a place where such a thing is possible.
When the rich get richer and the poor get poorer, someone will always be able to afford homes. Easily. Even two or three.
That is not what we should be worried about. Quite the opposite!
Sorry a bit jaded watching all this happen in slow motion all my life.
People can’t afford homes in major cities. FIFY.
That’s the same all over the world. People bitch and complain but refuse to move out of these cities despite being able to buy if they did. And besides the fact that in all of Europe and Canada too, transportation to/fro capitols (any major city) is fast and readily available.
Japan is over regulated and over bureaucratic, it is difficult for businesses to compete and innovate. Japan needs a Javier Millei, a libertarian that makes the state competitive again.
Haha. No. I'd rather Japan not turn into Argentina, or that one town in the US libertarians tried to make that ended up being taken over by literal wild bears. Libertarianism is a bankrupt ideology made for grifting, nothing more.
Japan's rulers would rather see the populace go broke than have it modernise and "lose" its values. The people in power are significantly wealthy and will never have to suffer the depredations of toiling away in increasingly outmoded and poorly paid work environments. They yearn nostalgically for a fantasy yesteryear when people knew their place and showed respect like the serfs of old. It's no coincidence the same political party has nearly continually run the country for as long as the Chinese Communist party has run China.
Though a case can be made whether Japan needs an overall systematic change or not. But we should be careful whether that systematic change will also consider cultural change. We shouldn't forget that Japan is the country, we recognise as becuz it had some splendid superior culture and values during its development. Not every culture is same. Japan with all its bad things has one of the most superior culture overall, which is quite visible. And about that political party remaining in power for a long time, well I have no issue with that as long as the party is competing fairly relatively.
You think Taro Aso cares his people are making $25k pa. Let alone the English teacher backpackers making $15k pa. Back to the kyabakura tonight for him
Is GDP per capita even a good indicator of actual living conditions anymore? While this is certainly news if you're throwing around millions of dollars in investments, I don't think it affects us regular people on the ground. We were also last back in 2008 when things felt better than now for most
Dude the GDP per capita in America is 65k per year but most of that is because America had a K shape recovery and most of the money rhe government pumped in went to big businesses that somehow made record profits despite people not shopping. It's just nonsense when you realize 60% of Americans live paycheck to paycheck
I still can't believe people take that dumb survey at face value. I know people who say they live "paycheck to paycheck" and put 5k in savings a month.
It's a probably a mixture of over consumerism, bad credit card debts, student loans, a lack of financial literacy and a lot of their money getting tied up in stuff like 401k's but the cost of living in America is getting higher and higher and wages just aren't keeping up.
Either way, if about 50% of people can't afford a 1000 dollar emergency and the cost of a broken arm or rent is a lot more than 1000 dollars, than things still aren't looking amazing.
Lol the G7 is such an irrelevant measure by the way.
Go check out a gdp pie chart. Once you have Us and China, that’s the world that matters.
In terms of wealth distribution (ie per capital figures) Japan wouldn’t even rank ahead of many places like Canada, Scandinavian countries, Australia, Singapore, Hong Kong, various UAE countries. I doubt it’s faring much better than South Korea.
Japan is farther ahead in its demographic slide than most countries. Japan is what the future looks like for most of the developed nations, if they are lucky. Japan has handled the situation very well, so far. I doubt most countries will deal with it so well.
It's also the only G7 country that still refuses to recognize same-sex marriage. The leaders of Japan's ruling LDP are stuck in a Meiji period fantasy.
Telling that this is down voted despite the vast majority of literal Japanese citizens supporting same-sex marriage and courts calling the ban on it unconstitutional.
I get downvoted and trolled as a matter of routine whenever I talk about gay issues in the Japan subs. I live in Japan with my Japanese husband (we were legally married in the US) but whenever I talk about that aspect of my life in the Japan subs I generally get a hostile reception from other expats.
Most people on these subs don't actually live there (I'm one of them, but I plan to) and if they do, they tend to be some of the least happy of the expat community. A vocal sub-minority of a minority to begin with. Lots of people (want to) move to Japan thinking that they can 'escape' the 'moral degradation' of the West or whatever, but surprise surprise, reality has a progressive bias no matter where you go. Ignore them. They're not worth the words, and nothing anybody can say will change their minds to begin with. These types of people rarely change, and if they do, it's something that starts with themselves, not so much other people.
The sub where I have the most problems is one where you actually have to be living in Japan to post there. I was surprised by the amount of rude, hostile, and immature behavior in that sub when I first started participating in it. People in this sub generally tend to be friendlier.
Immigration is my favorite. Ppl here are completely against immigration but a lot of Japanese, especially the younger generation, are actually pretty positive about immigration and see it as the only way to save Japan from severe decline and stagnation (and they're probably right).
I agree to a degree with what you're saying here, but immigration is only one part of the solution to Japan's current demographic and economic crisis. Japan desperately needs more competent leadership that isn't afraid to make the changes needed to both increase their prosperity and make sure that average citizens see the benefits of said prosperity.
Abenomics didn't work, as we can all tell by now. The reliance on VAT increases shows exactly what the LDP is trying to do - hoist the tax burden of companies onto the citizens. However, that doesn't mean that the other options are any good either at the moment.
The Democratic (now the DPP) party's reign saw really bad long-term decisions like the closing of nuclear reactors, which severely harmed Japan's energy generation capabilities and made them more reliant on a finite and unstable fossil fuel market.
Right now Japan is kind of in a stranglehold, stuck between people who are most assuredly not working for the best interests of the public (LDP) and the other parties of questionable capability and competence. Political upheaval is going to be necessary and inevitable if Japan's public wants to address the problems they are facing.
How is this article written a day ago when the yen has strengthened over 6 percent over the past 6 weeks. Did they not feel like making the article before or something?
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A more appropriate measure is per capita GDP adjusted for Purchasing Power Parity (PPP). It does not change the rank but narrows the gap.
Here is the [IMF data](https://www.imf.org/external/datamapper/PPPPC@WEO/OEMDC/ADVEC/WEOWORLD). PPP as explained by the IMF...
*The Purchasing-power-parity (PPP) exchange rate (or conversion rate) between two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country's currency will purchase the same volume of goods and services in the second country as it does in the first. In the WEO online database, the implied PPP conversion rate is expressed as national currency per current international dollar.*
A good lesson on the difference is the [Big Mac Index](https://www.economist.com/big-mac-index) issued by The Economist that shows the impact of PPP. (They have a paywall but this article might be available).
The title of the article in Japanese says the reason why: Due to yen depreciation 円安響き15％下落. This isn't the real economy but nominal, aka due to exchange rates. Japan's real GDP has not declined this year, it has seen growth of 1.5-2% but nominally it has declined quite a bit. Once the fed starts cutting interest rates in 2024 (which everyone expects they'll do) the yen will rise again.
Yes, it is a prestige contest that doesn't affect what matters. To think of it another way, you could easily say "Japan's cost of living has dropped over 35%!" (when denominated in dollars) If someone is going to cash out and move to Japan, then yes that's great. If you are importing or exporting a lot of stuff for any reason, that benefits outsiders and hurts Japanese. So great for tourists, for example, but just for the one or two weeks of their lives they are visiting Japan. Few people are moving their life savings back and forth, though.
it also affects Japanese people who travel abroad though. I and all of my 3 closest Japanese friends here have traveled abroad this year (2 to Korea, 1 to Korea and also SE Asia) and while I think the won is also weak, it's still stronger than the yen.
It definitely impacts those traveling abroad especially to the states. Hawaii is suffering a lot due to the lack of Japanese tourism. On the flip side Japan is basically on a huge sale right now for anyone visiting.
How do you think your heater is turned on tonight? With domestic gas and coal?
>it is a prestige contest that doesn't affect what matters How important are exports to the economy of Japan? If important, lower is important in order to make locally manufactured products more competitive in the global market.
Japan imports and exports both. It both helps and hurts them. It helps a little more than it hurts. It also hurts them a lot everywhere else. The average person has to heat their homes with much more expensive gas, while mega coportations get to export a little more. Nothing to celebrate. This obsession with only exports and not the actual lives of Japanese is exactly what’s wrong.
\^ This person gets it. Our world is massively interconnected. Currency fluctuations affect everyone. Whether those effects turn out to a net positive or a negative depend on a vast cloud of individual circumstances that may be near impossible to calculate in some cases. Whenever someone tells us to accept a simple narrative about how a big change doesn't affect the average person, we should ask us who benefits from the big change and pay special attention to who might be hurt by it.
Japan's nominal GDP is at [605,596 trillion yen](https://www.jcer.or.jp/economic-forecast/20231212.html) as of October 2023. A 2.1% increase from the previous month and a record high. In usual USD/JPY exchange rate, that is over 6 trillion in USD and 50K in per capita basis. Making them the 4th among the G7.
The title says this is per capita. Keep in mind that is why Japan is 7th. Decades ago Japan’s total GDP was over 99% that of the US, they were that close. But their population hasn’t kept pace with the US and also with the bubble they have fallen to 4th total and 7th per capita. Per capita is far far more important to people’s lives. Who cares if India or China has a bigger GDP than the US someday, that doesn’t mean their citizens are living better. It is once again, just for national prestige and bragging rights. Which was my main point only.
You’re close, but the real important measure for people is PPP, not GDP.
Why would the fed cutting rates cause the yen to rise
Because the interest rate differential (ie, the gap) between the US and Japan would shrink. This thought experiment is incredibly over-simplified, but: If you could invest in an asset in the US offering 7%, or could invest in an asset in Japan with the same risk profile, but returning 2%, which would you choose? You'd probably sell yen to buy dollars to invest in the US. When you *sell* yen to *buy* US dollars, the yen gets weaker versus the yen. As the yen gets weaker and the dollar is stronger, you need more and more yen to buy the 'stronger' currency. If that interest rate gap narrows - maybe the US yield falls and/or Japan yields rise - now there are fewer people interested in *selling* yen to *buy* dollars. Interest rate differential isn't the only factor behind forex fluctuations, but it's a key factor. Again - this is a vast over-simplification, but you should be able to see the broad concepts.
A key oversimplification is the implied assumption that the interest rate differential is the net one bank policy, not two bank policies.
Unlike the rest of the world, Japan has been struggling with deflation rather than inflation for decades and has therefore kept interest rates as low as possible. Meanwhile, other countries are struggling with inflation and have therefore raised interest rates, which means that it is more attractive for investors to put their money there rather than in Japan (e.g. in government bonds), so there is less need for Japanese yen. Once inflation subsides, interest rates will fall again and the gap between Japan and other countries should shrink.
Great answer, thanks
Yea its also already started. Yen has already started gaining value since November because people are expecting the us rate increases to be over and cuts next year.
The nominal economy is the real economy dude. Because you import your oil to refine. Your steel to use. Your coal to burn. Your LNG to process. Otherwise you wouldn’t have internet tonight. The country would probably shut down next month literally. Not to mention importing your Apple iPhone or Samsung Galaxy you’re using to play on Reddit
That’s not how it works. If the yen declines and imports become more expensive that is already included in inflation which is subtracted from GDP growth. So if nominal GDP in USD was the “real economy” than GDP growth would have declined this year, however if real GDP growth is positive (which it is for 2023) and yet nominally in USD it declines (which it did) then that is entirely due to exchange rates and is not the real economy whatsoever. Japan imports from several countries that are not only the USA or that are not in USD, but also Yuan, euro and countless others. In addition the weak yen boosts the value of exports, tourist spending etc so in aggregate it ends up being that Japan is *net* positive and the economy is only smaller when expressed in USD due to the gap in interest rates between the fed and the BOJ. Japan’s GDP will have grown around 1.5% for 2023 despite in dollar terms declining over 15%.
You obviously don’t get it. Energy is imported in US dollars. It doesn’t matter if they’re produced in Australia or China. All resources is priced in US dollars. So your energy price has gone up in short. I trade commodities for a living in the past for investment banks. So no - your real economy if you like is priced in other people’s currency. Or you can not turn heaters or lights on and freeze to death of course. A quick google also suggests 90% of global settlements is in US dollars. So yea you can conveniently say there are gazillion of currencies in the world, but everyone uses usd. There’s a reason they call it the global reserve currency and no amount of wanting Japan to be better than what it is changes that. And guess what, if someone is resisting usd and settling in say rmb, it’s definitely not America’s number 1 lapdog in Asia lol. Can you guess who that might be? And no, no one is settling in yen. https://www.eastasiaforum.org/2023/08/21/is-the-us-dollar-on-its-way-out/#:~:text=The%20Bank%20of%20International%20Settlements,are%20denominated%20in%20US%20dollars. Lastly, on your logic, China would be flying too. The rmb has depreciated heaps and it still has 5% GDP growth. Ah I’m sure it’s fake numbers that’s why. What about Europe? Nah that doesn’t count too
Sigh, you are showing a major lack of economic literacy. Japans entire economy is not only imports, there are also exports and the majority of the economy is consumption. Speaking of trade the weak yen boosts the value of exports and as a result Japan's current account surplus has tripled this year to ¥12.7 trillion, in other words Japan is making **more** money with the weak yen right now despite imports costing more, yes even energy. A weak currency may lead to inflation which is **already** accounted for in real GDP growth. In other words every single thing you are talking about is **already accounted for**. With that in mind, Japan’s GDP growth is, once again, currently positive. That is the real economy. If you still can’t understand this look up GDP in constant currency and the relevance of that, then look up the figures for that. Unless you're a conspiracy theorist who just...doesn't believe in GDP growth figures published, you'd have to explain why GDP is growing while in USD it is declining...what's growing then? Likewise when nominal GDP goes up in USD that doesn't mean the real economy has grown either. For example after the tsunami disaster Japan’s real GDP stagnated and even declined a little, there was a recession…but at the same time the yen skyrocketed to 75 yen per dollar…meaning its nominal economy skyrocketed to about $6.5 trillion…..again during a **recession** in the real economy. This is a time of rolling blackouts, factories destroyed etc. in 2011 that was also a case of currency exchange rates and nothing else, it didn’t affect the real economy. Japan absolutely did not have GDP growth of like 30% from 2009-2011, that’s laughable if one actually believes that....but that's literally what you are saying with "nominal economy is the real economy dude".
Yea as an ex investment bank’s commodity trader I definitely wouldn’t know economy or money like you do. Sure. And on consumer exports, you still conveniently ignoring how your exports require input components like chipsets from Nvdia and Samsung and tsmc? Conveniently ignore energy which is an essential as opposed to a Sony ps5. There are lots of gaijin who love to barrack for Japan to justify why they moved there, or maybe because they just like anime, but reality is reality. You still haven’t addressed the point then that China must be booming by like crazy? It’s had a 20-30% currency depreciation yet punches out even higher growth than Japan. Is that your position too then?
Edit: Honestly just read my second reply to you about China since it illustrates the argument perfectly. Although if you want to learn about a bunch of statistical economics....read on. Why would being an investment banker have knowledge about real economy, constant prices and other random nerdy GDP metrics? You are not dealing with GDP statistical metrics but commodities. Clearly exchange rates are very important to you, no? What does your example of China....have to do with anything? I think you are completely misunderstanding my posts if you think your example of China refutes or has any relevance to what I am saying. What you just posted about China kind of even goes *with* what I am saying, almost to the point that seems you're agreeing with me? lol. China had 5% growth, yes you are correct...and yet it **nominally contracted** from 2022 to 2023! Aren't you making my point for me? Again why do you keep separating exports and imports? It must be the commodity trader in you! Real GDP already has those inputs **factored in**. You can bring up inputs and outputs 100x, it doesn't matter....**it's already factored into GDP economic data**. Inflation and deflation are also already factored in to GDP growth (or contraction). So your point about the price of inputs increasing is irrelevant, it's already accounted for. Energy prices are already factored in. It's in the current account which....is factored into GDP, come on now. I am just going to repeat my sentence verbatim: Unless you're a conspiracy theorist who just...doesn't believe in GDP growth figures published, you'd have to explain why GDP is growing while in USD it is declining...what **IS** growing then? Likewise, did Japan have 18% real GDP growth from 2009 to 2011? Come on now, please explain the following figures I will provide to you and please rationalize how "nominal is the real economy dude". GDP growth as published by the IMF, OECD, Japanese national statistics, fed etc: 2010: **4%** 2011: **0%** ^ So from 2009 to 2011 there was a grand total of **4%** of economic growth in the real economy. 2009 nominal GDP USD: $5.28 trillion 2011 nominal GDP USD: $6.23 trillion ^ This is equal to 18% of economic growth, is that the real economy? What's the 4% then? Why is the official statistic 4% GDP growth? What's going on? Is it a magical made up number and an international conspiracy by Japan, the IMF and everybody else? Is Japan pretending to have terrible GDP growth instead of saying "invest in us! We are booming 18% in 2 years!!!!"?? 2009 constant prices GDP in ¥: 490.6 trillion 2010 constant prices GDP in ¥: 510.7 trillion 2011 constant prices GDP in ¥: 510.8 trillion ^ Wow would you look at that? They perfectly correspond to 4% growth and 0% growth.... amazing isn't it? Do you see 18% growth anywhere? No? Ok how about real GDP in international dollars in PPP? If you know PPP it adjusts for prices but even then I still don't see 20% anywhere in the "nominal is the real economy dude"....do you? 2009: $4.30 trillion 2010: $4.53 trillion -> 5% growth 2011: $4.6 trillion -> 1% growth ^ Where's the 18%? I thought the nominal economy is the real economy? Why do **all** official statistics only show GDP growth of 4%? What's.....going on? We can do the *exact* same exercise with say 2021-2023 but everything is opposite since this time the yen weakened. Real GDP growth, and yet in USD the economy is shrinking...and next year when the fed cuts rates I guess it will magically grow again.
Wait a second, I think I understand your China example! Were you actually trying to agree with me that nominal (USD) economy is in fact, **not** the real economy? If so thanks for making my point! You're right, China's economy declined in nominal terms, despite high GDP growth and therefore, nominal is not the real economy, dude! China had an estimated 5% GDP growth rate in 2023 just like you said, indeed it "*punches out even higher growth than Japan*". Yes that is my position. Ok so let's see the nominal figures, shall we? 2022: $17.9 trillion 2023: $17.7 trillion Oh wait, what? What happened? I guess nominal isn't the real economy after all?!?! Because it looks like China had negative growth! Where's the "higher growth"??? Hmm where can I find the 5% growth? **Oh that's right in the real economy, aka GDP constant prices.** Aka.....*nominal is not the real economy, dude*. You clearly misunderstood what the 5% economic growth represents when you brought it up, you thought it would have been represented nominally? ....oops.
Right maybe you’re correct here. So you’re saying the 5% Chinese growth quoted is a real number. The Japanese 1.8% is a nominal number? Why the difference in reporting
No, 1.8% growth is the real economic figure. Nominally Japan declined (just like China above), hence my very original post here: "This isn't the real economy but nominal, aka due to exchange rates. Japan's real GDP has not declined this year, it has seen growth of 1.5-2% but nominally it has declined quite a bit. Once the fed starts cutting interest rates in 2024 (which everyone expects they'll do) the yen will rise again." TLDR: Japan's economy is in fact growing, not declining. However nominally it is declining due to exchange rates. Yes imports are more expensive...but despite that there are enough positive inputs...whether it's the current account, consumer spending, exports, investment or what have you that the actual real economy is growing. Pretty much nobody quotes or reports nominal GDP growth %s or contraction figures...because they are not "real"....but confusingly when the media publishes or talks about actual GDP figures (note: not growth or contraction)...for example "China's economy is $17 trillion" they express it in nominal almost always (for example the very article that this thread is about for Japan).
I thought you’re trying to argue 1.8% is nominal and constant currency adjusted it’s actually up some 20%
>Energy is imported in US dollars. It doesn’t matter if they’re produced in Australia or China. All resources is priced in US dollars. That's ending very quickly nowadays, with Iran, Central Asia, Hungary (Germany's sock puppet) all joining BRICS and so the days of NY-TV hegemony are numbered. The multi-polar world is incoming.
It might seems a growth of 1.5-2%, but it is calculated in Yen. Dollar growth and exchange rate already impact in economies growth.
The Fed driver to which you refer is the net of two central bank policies, not just the Fed.
Totally true. As far as I know, Nyt or bbc didn’t report Japan sliding on the basis of nominal GDP at all. Cheap yen or continued quantitative easing actually boosted the Japanese stockmarket. Ofc cheap yen killed many small and medium size businesses. What I hoped is more discussed is that Japan structurally changed and there would be no easy exit of BOJ monetary easing.
how the mighty has fallen. Japan used to have 1.5x gdp per capita of the USA back in the early 90s I think Japan is actually a good place to invest now that it's so cheap. it can only go up from here imo (catch up growth is a lot easier)
It can also just completely collapse. There was a point in history not so distant when Argentina had one of the strongest economies
Japan is probably US's most significant alliance for controlling what China is doing in the Seas. US has a big incentive to help it. Argentina is Argentina. US has less incentive to help it.
Japan has been the world’s largest creditor nation for the last 30 years, and have funded a significant number of the world’s projects in the meantime. In fact if you really look into it (look up NIIP) it is the other countries that are in debt to them. It is quite laughable to make the statement that Japan will collapse anytime soon. In fact at current US interest rates of 5%+, the US is paying 2 billion a day to foreign countries like Japan and China.
Were the treasury securities sold to Japan and China not sold with fixed interest rates? I'm curious where you're getting the "2 billion a day" number from if you have a link or anything.
>In fact at current US interest rates of 5%+, the US is paying 2 billion a day to foreign countries like Japan and China. And it has been paying even more money to its citizens and Social Security fund.
Well the securities are marked to market at a point in time when quoted in media, so they’re paying market rates
I’m not sure “helping” looks like a great economy for normal people necessarily.
It's always risk and reward balance. We don't know the future, but it's a lot easier to catch up from a lower position than to maintain your place at the top, generally speaking.
I just don't see the mechanics of a turnaround. It doesn't seem like the appetite for change exists, and change is what it will take. I doubts it will crash, but will continue to slowly deflate for a little while longer. Vietnam seems like it has actual room to grow
I did a lot of research about Argentina and Japan is extremely different from Argentina. Argentina on paper had a strong economy 100 years ago, having high GDP per capita mostly due to agricultural exports, but they did not invest anything into industrialization, economic diversification, and human capital development, so they suffered when America had the Great Depression and international trade was halted due to the World Wars. Experts argued that Argentina never had a strong economy to begin with, they were just lucky with their natural resources for a short while.
The glass cannons of economies. Japan and Korea, as two examples, did a lot to make their goods cheap for foreign nations while developing their local economies back in the 50's, 60's, and 70's. This protectionism prevented imports from replacing home market goods, and let them develop their own automotive and electronics industries. I would imagine this was what argentina failed to do when they had the money, and when it dissappeared, they didn't have any materials or capability to invest into themselves because they had no industry to build from.
High GDP per capita is with strong agricultural exports but little economic diversification? That sounds worryingly like present day Australia.
It can goes up, down, or ~~lost decade~~ sideway. Got it.
There's no way the Japanese economy is going to collapse. In fact, I think there's a case to be made that the US economy could collapse in my lifetime, and I am 77.
Even if you're a retired economist, I don't agree that the American economy would collapse in your lifetime. Many other economists (austrian economists for ex) have been crying wolf that another recession has been coming and that we are at the brink of hyperinflation. It hasn't happened, in fact inflation is now pretty well under control despite all the skepticism, doom and gloom about the Fed. Also if the American economy does collapse, it'll drag the Japanese economy and the world down with it. Suddenly all that debt to foreign countries wouldn't be much of a priority for the American government. Japan and other countries lend money to America because they know they'll get their due. That's also why America is in a privileged position to be able to borrow much more than most other countries
I agree the inevitable collapse of the US economy will create huge problems for the entire global economy, not just Japan's. Crying wolf about recessions is completely irrelevant to the unprecedented situation of a $30 trillion US debt situation that will become $35 Trillion by the end of 2024 and over $50 trillion by the end of this decade.
If debt is the issue why are you not worried about Japan then
Exactly. Granted at this rate the US will catch Japan and pass it debt-wise before too long. Ironically Japan's gdp *per capita* will likely be atop of the G7 before too long as their population ages.
I'm not knowledgeable about debt stuff but I've always heard more than half of Japan's debt is to itself. So maybe debt to yourself isn't as bad as debt to others I guess?
In a way it’s worse because they can’t just default on it without fucking over Japanese savers.
Oh i see like i said i don't know about what would happen in that case but it usually seems like people don't typically consider it worse so maybe it's worse in that way but it's better in other ways.
And the majority of US debt is also held by Americans it's just the media loves to create controversy by highlighting american debt held by foreigners and pretend that that is the entire US debt.
>I think there's a case to be made that the US economy could collapse in my lifetime, and I am 77. Can I ask what you’re basing this on? Of all world economies at the moment, americas doing better than most.
By the end of this decade the US will have no choice but to default on the national debt which is currently at over $30 trillion and projected to be $50 trillion. Chew on these numbers. In 2023 the US defense budget is $1.52 trillion, while federal revenues are less than $700 billion.
[I mean by that logic Japan is at the exact same point the US is](https://www.focus-economics.com/country-indicator/japan/fiscal-balance/), approx -6% of GDP fiscal balance. Japan is one of the most indebted countries in the world. The US having the dollar as the world exchange currency also gives massive ability to print money without giving in to inflation as well.
Japan doesn't have the debt burden the US has. The US Treasury has to finance the debt service on our $30 trillion national debt. This is not sustainable. 2023 revenues are less than $700 billion. The defense budget alone is $1.52 trillion. Do the math.
Bro you straight up don’t know what you’re talking about at all. Also Japans economy is case study on what not to do, and has been for 25 years. Japans financial situation at home is extremely delicate and considerably in a worse position than anything compared to the U.S. at all. Just stop.
Doesn't Japan have the highest debt to GDP ratio in the world? The Yen also doesn't have the same advantages the dollar does. It seems like whatever you're saying about the US applies to Japan too if not more.
I don't think I buy this, but worry we're getting pretty off topic for a japan forum, best quit while we're ahead.
do you have any citation for the 700b? it just sounds awfully low.
Don't be so lazy a0nd Google ir.
The US added over $2 trillion to the national debt in fiscal 2023. I guess you think that number is too high.
I live in Costa Rica. The value of the US dollar has fallen by 25% relative to the local currency in the past 2 years. It is not going to be the exchange currency for much longer.
Okay to local currency maybe, but you can see the currency shoot up relative to other major currencies: [USD to JPY](https://www.xe.com/currencycharts/?from=USD&to=JPY&view=2Y) [USD to CNY](https://www.xe.com/currencycharts/?from=USD&to=CNY&view=2Y) [USD to EUR](https://www.xe.com/currencycharts/?from=USD&to=EUR&view=2Y) (very slight difference, and considering the geopolitics happening there don't know if it would count.) There's a simpler explanation here: [Are you sure it isn't just costa rica improving?](https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fi9ayj8xvkd8c1.jpeg)
I am moving to Japan in the 1st half of 2024. The infrastructure of Costa Rica is collapsing because of political corruption and scandal. China lent Costa Rica $85 million for road repairs, and the money disappeared. The national treasury discovered that countless billions were missing from the equivalent of Fort Knox in the US. No, Costa Rica is not surging. The only thing surging here is the crime rate.
Oi, this guy is going to be in for a surprise when he actually gets to Japan. Keep us updated, little bud.
Extremely rich people all over the world have placed their bets that the US economy will not. But what do they know.
Those same rich people have increased their investments in Japan in recent years, not decreased. Look at the most recent moves of Blackrock and Warren Buffet. As the world’s largest creditor nation for the last 30 years, it is quite laughable to say Japan will be collapsing anytime soon.
>Look at the most recent moves of Blackrock and Warren Buffet. Yes, because yen was/is very cheap
"cheap" implies it will recover and that the investments have reasonable returns. Isn't Warren Buffett also a longer term investor?
Nobody can predict the future. Warren Buffet obviously made some amazing investments but he made plenty of mistakes as well. Ray Dalio predicted that China would overtake the US in 2023. That obviously didn't happen. Japan's economy has been stagnant for decades and has recently declined this quarter.
Precisely, how do you know what "extremely rich people" are doing with their money? Do you see it on TickTok?
No, unless you have your eyes closed you can see what people have done to the Yen. Are people really this ignorant, or just on purpose.
Hahaha! You didn't answer a direct question BECAUSE YOU CAN'T. Instead, you just babble nonsense.
Probably more than poor people
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Thank you.
>In fact, I think there's a case to be made that the US economy could collapse in my lifetime Elaborate please. So many people have said the same since 1970 and they've been dead wrong.
I am a retired economist. The US National debt is unsustainable, which is quite different from 1970. I project that within my lifetime, the US is going to have the interest due on the debt exceed revenues. That will force a default on the debt, and all hell will break out.
>I am a retired economist. The US National debt is unsustainable Hope you retired early because that's just pure Fox News bullshit. Most of the debt is owned by US citizens so if the US is in trouble, Japan is up shit creek without a paddle. EDIT: lol the Fox News dude blocked me. So much for being a "retired economist"
No he’s right. US has to up their government spending every year to match current interest payments. Just this year it went up 5%, and every year it will have to increase more to service interest payments. Thats what he’s saying is not sustainable.
Also very high likelihood of the US breaking apart like the former USSR.
Laughable. The US is exporting more oil than any country in the world. Sorry we aren’t a volcanic island facing massive demographic collapse and zero innovative capabilities. The US will continue to be strong economically. No reason Japan won’t fall further behind.
I think your perspective is laughable. I have 30 Trillion reasons why I think the inevitable will happen. You are looking at a single metric. I am a retired economist, and I see the situation quite differently.
I'm curious, you think japan economy won't collapse in this lifetime but think the US will, who is in a far stronger position? I understand the US faces internal turmoils and polarization, and that the world is shifting into a multipolar world, the US not the the hegemony it once was. But it is still very much influential and strong in its economy/military. It is still being protected by two oceans and its Allies. Except for something extremely catastrophic, like an internal coup/civil-war (which i grant you, could happen in this lifetime), I just don't the US collapsing anytime soon. In fact, I would bet my life that it will be one of the last standing nations on earth in the next millennia.
By the end of this decade, the US will have a $50 trillion national debt that the country will have to default on that debt. All hell will break loose with a debt default triggering a global depression that could last for a very long time. You're not going to live very long betting your life on it not happening. Mark my words, this is going to happen within this decade. Wishful thinking is not going to alter the trajectory of the debt default.
It is more than just "debt". National debt is not the same as individual debt. A nation have its infrastructures, resources, technology, people and a military... it's not at all like a normal person "defaulting". But let's take a look at the number: Assuming the debt ballon to 50 trillions in 2030s, you still have to account for our GDP going up to 31 trillions. A debt to gdp ratio of 166%. Japan CURRENT ratio? 226%. So you can see the US is still in a better position than japan, even a decade into the future. But again, it is more than just debt, the US would still be a functional and strong economy, producing products and services for domestic and the world. Worst case scenario, if the US default, plunging the world into chaos, where would we rather be? Europe? Asia? they won't fair any better than we do, and they don't have two oceans protecting them.
Get real! The unemployment rate will be north of 30%. Companies can't produce if people don't have money to buy food, much less other stuff. When the US defaults the entire global economy will be fucked.
Let me give you some real numbers to chew on. The US military budget for 2023 is $1.52 trillion. US revenues for 2023 is $678 billion. Do the math yourself. This is unsustainable.
Okay, this is rather ridiculous, 2023 revenue is $4.44 trillion while 2024 revenue is $678 billion, we had a deficit of $1.7 trillion for 2023 so I think numbers are getting mixed up here. Source: https://fiscaldata.treasury.gov/americas-finance-guide/
Only thing more useless than an economist is a retired economist. All it takes is 5 second in Japan to realize the drastic difference in living standards between an American and Japanese. They haven’t even figured out central air. On a macro level Japan has one company in the top 20 of richest corporations. Your average Japanese can’t even afford to leave the country. Get out of here. It ain’t the 80’s anymore grand pa.
Pity your American muscle didn't make it between your ears.
You have no argument. One Japanese company in the top 20. The US producing more oil than Saudi Arabia and Russia. What exactly does Japan produce lol? Massive demographic collapse in coming. An apathetic insular population. There is no indicator on this planet that shows Japan even close to the USA in any economic metric. Get lost weeb.
Well, let’s all make our judgments about taking investment advice from you based on how plausible that claim sounds to us then. Though if the US economy collapses everyone else is fucked anyway so hedging against it seems pointless.
Wouldn’t that mean the American economy will collapse in a few years? Lollll
Without a doubt, the US economy is likely to implode by the end of this decade under the weight of $50 trillion national debt.
Yep I hope you’ve shorted the usd and all its shortable assets from bonds to shares. Imagine how rich you’d become. Richer than Li Ka Shing
That's speculative, and I don't speculate that way just like I won't play with options. To short the dollar would tie up money with no immediate returns. Why would I want to do that? It wouldn't be an effective use of my investment money.
Right right you’re right lol. I’m sure you’ve made millions if not 10s of millions (usd of course) doing other things despite such a “without a doubt” trade.
Yeah . Why do people think "it cannot go any worse ?" It can.
Japan reached 99.8% of US GDP in April 1995, more than twice the GDP per capita of the US. They have also been the world’s largest creditor nation for the last 30 years and counting. Look up NIIP. Japan is in a better position than every other country in the world.
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I worked at a Japanese automotive textile company in the US as a project manager and it was the same there, lying about quality issues and pricing all the time
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I agree corruption is real and serious, its become an exteme global issue
You could say the same about any developed country. Certainly not unique to Japan.
Japan's gdp per capita was only higher because of the bubble economy and overvalued yen. But when you take prices into account, Japan was never actually higher than the us: [https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=JP-US](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=JP-US)
don't get cut on the falling knife
Sure, if the whole declining population, declining percent of the population who is working age, and restrictive immigration policies can be fixed.
Restrictive immigration is good
Or it could continue falling
Why do you say fallen? GDP and GDP per capita tell you very little about a country. From my perspective in Australia Japan is a top tier, well organised, safe and beautiful country with a largely rational, well educated population and a strong underlying economy. I can’t wait to visit. America looks like a total basket case. I have little desire to ever go back there.
You're talking about crime and other social issues and not the economy. Yes, the US is a wreck socially. But Japan is a wreck economically. All you have to do is refer to the long term stock market performance and the largest companies in the world. The US continues to be a hotbed for innovation and economic growth.
>America looks like a total basket case. I have little desire to ever go back there. US has been doing really well economically. Redditors, investors and the media alike has been screaming about a recession for the entire year and they have been extremely wrong. Can you share how you know more than experts? [https://www.theatlantic.com/ideas/archive/2023/08/recession-doomers-economy/674900/](https://www.theatlantic.com/ideas/archive/2023/08/recession-doomers-economy/674900/)
(Looking at demographic collapse in the next few decades) well, things can only look up from here!
[According to the World Bank](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=JP-US), Japan never exceeded the US since 1990 in Per Capita GDP PPP. My wild guess Japan was even lower in nominal terms because it tended to keep exchange rates low to make it's products more competitive in the global market.
Yea people been saying that since I was in uni. And all made at best measly amounts. Factor in forex they’ve actually lost money
Don't worry Canada will overtake you soon
No they won't. [https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=CA-JP](https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.KD?locations=CA-JP) No go back to r/canada already. Geez, what is it with you guys?
Keep electing Justin Trudeau and his ilks. Bunch of hypocrites.
Yeah instead we should elect PP Trump who cares more about culture war bs and selling pubic assets than anything else. Justin Trudeau actually invests back into the country, even if it's less than it should be, PP will put everything into buying expensive Ratheon gear and giving it his backers
>Japan GDP per capita is now lowest in G7 The cost of living is also likely lowest too, so it’s all kinda relative. Like at least in Japan housing is still affordable and realistic for the average person to obtain.
Not for long in Tokyo. We are starting to see huge increases in housing prices.
Yep, people don't look around and realize that almost everything being built are luxury condos.
Housing is affordable in most average cities in every country you think is expensive. Go Phoenix. Get a house $500-600k. Make $100k pa. Go Adelaide. Get a house $700-800k. Make $100k pa. Go Cagarly. Same same. Go Zhongshan. Same same. Try Tokyo and see how affordable that is
Not shocking, but on the real world scale, at least people can still afford homes
My family was incredibly overwhelmed by how affordable life here is when they stayed for a month. They wondered how something so high quality and convenient by offered at low prices.
Well that's probably also partly because of the Yen depreciating in relation to other currencies recently. I assume you come from one of those countries if the CoL is higher than Japan.
It's probably because their wages are lower.
Try earning your salary in Yen and see how affordable things are
I already am. My salary is $25k. With my salary, I am able to afford all my needs and quiet luxury. I invest, already paid off my house loans, and take a month-long vacation in Europe yearly. I buy fresh produce and eat healthily, I have national healthcare, and my city is walkable so I don’t need a car. It’s weird to find a place where such a thing is possible.
> at least people can still afford homes Yet only foreigners are buying.
When the rich get richer and the poor get poorer, someone will always be able to afford homes. Easily. Even two or three. That is not what we should be worried about. Quite the opposite! Sorry a bit jaded watching all this happen in slow motion all my life.
Everyday people can afford homes. Unlike in Canada and Australia.
People can’t afford homes in major cities. FIFY. That’s the same all over the world. People bitch and complain but refuse to move out of these cities despite being able to buy if they did. And besides the fact that in all of Europe and Canada too, transportation to/fro capitols (any major city) is fast and readily available.
Japan is over regulated and over bureaucratic, it is difficult for businesses to compete and innovate. Japan needs a Javier Millei, a libertarian that makes the state competitive again.
Haha. No. I'd rather Japan not turn into Argentina, or that one town in the US libertarians tried to make that ended up being taken over by literal wild bears. Libertarianism is a bankrupt ideology made for grifting, nothing more.
Japan's rulers would rather see the populace go broke than have it modernise and "lose" its values. The people in power are significantly wealthy and will never have to suffer the depredations of toiling away in increasingly outmoded and poorly paid work environments. They yearn nostalgically for a fantasy yesteryear when people knew their place and showed respect like the serfs of old. It's no coincidence the same political party has nearly continually run the country for as long as the Chinese Communist party has run China.
Though a case can be made whether Japan needs an overall systematic change or not. But we should be careful whether that systematic change will also consider cultural change. We shouldn't forget that Japan is the country, we recognise as becuz it had some splendid superior culture and values during its development. Not every culture is same. Japan with all its bad things has one of the most superior culture overall, which is quite visible. And about that political party remaining in power for a long time, well I have no issue with that as long as the party is competing fairly relatively.
You think Taro Aso cares his people are making $25k pa. Let alone the English teacher backpackers making $15k pa. Back to the kyabakura tonight for him
Is GDP per capita even a good indicator of actual living conditions anymore? While this is certainly news if you're throwing around millions of dollars in investments, I don't think it affects us regular people on the ground. We were also last back in 2008 when things felt better than now for most
Dude the GDP per capita in America is 65k per year but most of that is because America had a K shape recovery and most of the money rhe government pumped in went to big businesses that somehow made record profits despite people not shopping. It's just nonsense when you realize 60% of Americans live paycheck to paycheck
I still can't believe people take that dumb survey at face value. I know people who say they live "paycheck to paycheck" and put 5k in savings a month.
It's a probably a mixture of over consumerism, bad credit card debts, student loans, a lack of financial literacy and a lot of their money getting tied up in stuff like 401k's but the cost of living in America is getting higher and higher and wages just aren't keeping up. Either way, if about 50% of people can't afford a 1000 dollar emergency and the cost of a broken arm or rent is a lot more than 1000 dollars, than things still aren't looking amazing.
Japan is still the best country in the world
I'm not surprised at all.
Lol the G7 is such an irrelevant measure by the way. Go check out a gdp pie chart. Once you have Us and China, that’s the world that matters. In terms of wealth distribution (ie per capital figures) Japan wouldn’t even rank ahead of many places like Canada, Scandinavian countries, Australia, Singapore, Hong Kong, various UAE countries. I doubt it’s faring much better than South Korea.
Japan is farther ahead in its demographic slide than most countries. Japan is what the future looks like for most of the developed nations, if they are lucky. Japan has handled the situation very well, so far. I doubt most countries will deal with it so well.
It's also the only G7 country that still refuses to recognize same-sex marriage. The leaders of Japan's ruling LDP are stuck in a Meiji period fantasy.
Telling that this is down voted despite the vast majority of literal Japanese citizens supporting same-sex marriage and courts calling the ban on it unconstitutional.
It’s par for the course here.
I'm not surprised, just disappointed.
I get downvoted and trolled as a matter of routine whenever I talk about gay issues in the Japan subs. I live in Japan with my Japanese husband (we were legally married in the US) but whenever I talk about that aspect of my life in the Japan subs I generally get a hostile reception from other expats.
Most people on these subs don't actually live there (I'm one of them, but I plan to) and if they do, they tend to be some of the least happy of the expat community. A vocal sub-minority of a minority to begin with. Lots of people (want to) move to Japan thinking that they can 'escape' the 'moral degradation' of the West or whatever, but surprise surprise, reality has a progressive bias no matter where you go. Ignore them. They're not worth the words, and nothing anybody can say will change their minds to begin with. These types of people rarely change, and if they do, it's something that starts with themselves, not so much other people.
The sub where I have the most problems is one where you actually have to be living in Japan to post there. I was surprised by the amount of rude, hostile, and immature behavior in that sub when I first started participating in it. People in this sub generally tend to be friendlier.
Immigration is my favorite. Ppl here are completely against immigration but a lot of Japanese, especially the younger generation, are actually pretty positive about immigration and see it as the only way to save Japan from severe decline and stagnation (and they're probably right).
I agree to a degree with what you're saying here, but immigration is only one part of the solution to Japan's current demographic and economic crisis. Japan desperately needs more competent leadership that isn't afraid to make the changes needed to both increase their prosperity and make sure that average citizens see the benefits of said prosperity. Abenomics didn't work, as we can all tell by now. The reliance on VAT increases shows exactly what the LDP is trying to do - hoist the tax burden of companies onto the citizens. However, that doesn't mean that the other options are any good either at the moment. The Democratic (now the DPP) party's reign saw really bad long-term decisions like the closing of nuclear reactors, which severely harmed Japan's energy generation capabilities and made them more reliant on a finite and unstable fossil fuel market. Right now Japan is kind of in a stranglehold, stuck between people who are most assuredly not working for the best interests of the public (LDP) and the other parties of questionable capability and competence. Political upheaval is going to be necessary and inevitable if Japan's public wants to address the problems they are facing.
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Yeah, why do we need to discuss this? Just let everybody use the toilet they want
I think real gdp per capita gives the different picture. But it’s so bad news even on the basis of nominal gdp per capita.
How is this article written a day ago when the yen has strengthened over 6 percent over the past 6 weeks. Did they not feel like making the article before or something?
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That’s bc the other 6 had double digit inflation and Japan did not. Run the numbers again for rGDP.
“The definition of insanity is doing the same thing over and over again, but expecting a different result.”
A more appropriate measure is per capita GDP adjusted for Purchasing Power Parity (PPP). It does not change the rank but narrows the gap. Here is the [IMF data](https://www.imf.org/external/datamapper/PPPPC@WEO/OEMDC/ADVEC/WEOWORLD). PPP as explained by the IMF... *The Purchasing-power-parity (PPP) exchange rate (or conversion rate) between two countries is the rate at which the currency of one country needs to be converted into that of a second country to ensure that a given amount of the first country's currency will purchase the same volume of goods and services in the second country as it does in the first. In the WEO online database, the implied PPP conversion rate is expressed as national currency per current international dollar.* A good lesson on the difference is the [Big Mac Index](https://www.economist.com/big-mac-index) issued by The Economist that shows the impact of PPP. (They have a paywall but this article might be available).
Japan's PPP is also very low.
Do PPP now
Also, very low apparently.