Japan's Economic Woes Continue: GDP Shrinks in First Quarter, Lost Decade Redux?
GDP Stagnation and Stagflation
Japan's nominal gross domestic product (GDP) per capita has remained stagnant around $40,000 since the 1990s, while other economies have seen significant growth. This stagnation has been accompanied by a rare economic phenomenon known as "stagflation," where both unemployment and inflation are rising.
Slow Economic Growth and Recession
From 2011 to 2019, Japan's GDP grew by an average of just under 1% per year. In 2020, the onset of the global recession dealt a further blow to the Japanese economy. In the January-March period of 2023, Japan's GDP shrank by 2% on an annualized quarterly basis.
Return to the "Lost Decade"?
The current economic downturn has raised concerns that Japan may be entering a period similar to its "Lost Decade" from 1991 to 2001, which saw a significant slowdown in economic growth. While the current situation is not identical to the Lost Decade, it highlights the ongoing challenges facing the Japanese economy.
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