Japan Slips Into Recession, Loses Spot as World's No. 3 Economy

    Japan Slips Into Recession, Loses Spot as World's No. 3 Economy
    Photo: Tomohiro Ohsumi/Contributor/Getty Images News via Getty Images

    The Facts

    • The Japanese economy declined in Q4 last year due to four-decade high inflation and a weak yen despite projections of moderate growth, pushing the country into a technical recession after economic contraction was reported in two straight quarters.

    • According to the latest data from Japan's Cabinet Office, its GDP fell by 0.4% in the final three months of 2023, compared to a year earlier, after shrinking by 3.3% in Q3.

    The Spin

    Narrative A

    Things look bleak for theJapanese economy. While the Q4 contraction may have been due to a trend in saving money due to inflation, a third consecutive decline is likely between January and March 2024 amid falling exports.

    Narrative B

    There's room for optimism in Japan, as available data for the current quarter indicates a potential recovery based on exports and on private consumption since inflation is stabilizing and wages are expected to grow.

    Nerd narrative

    There's a 50% chance that the LDP will lose its status as largest party in the House of Representatives of Japan by March 27, 2043, according to the Metaculus prediction community.

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