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East Asia Japan is no longer the world’s third-largest economy as it slips into recession

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East Asia Japan is no longer the world’s third-largest economy as it slips into recession
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Japan has lost its spot as the world’s third-largest economy to Germany, as the Asian giant unexpectedly slipped into recession.
Once the second-largest economy in the world, Japan reported two consecutive quarters of contraction on Thursday — falling 0.4% on an annualized basis in the fourth quarter after a revised 3.3% contraction in the third quarter. Fourth-quarter GDP sharply missed forecasts for 1.4% growth in a Reuters poll of economists. A recession is broadly defined as two consecutive quarters of contraction.
On a quarter-on-quarter basis, GDP slipped 0.1%, compared with a 0.3% rise expected in the Reuters poll.
For 2023, Japan’s nominal GDP grew 5.7% to reach 591.48 trillion yen, or $4.2 trillion, based on the average exchange rate that year, official data showed. On the other hand, Germany saw its nominal GDP grow 6.3% to reach 4.12 trillion euros, or $4.46 trillion, based on last year’s average exchange rate.
Nominal GDP measures the output value in current dollars without adjusting for inflation.
In response to the latest GDP release, the benchmark Nikkei 225 climbed 0.65% and briefly surpassed the 38,000 mark in the morning session, as investors saw the weak economic reading as a sign the Bank of Japan could delay its exit from the country’s long-standing hostile interest rate policy.
 
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Japan has lost its spot as the world’s third-largest economy to Germany, as the Asian giant unexpectedly slipped into recession.
Once the second-largest economy in the world, Japan reported two consecutive quarters of contraction on Thursday — falling 0.4% on an annualized basis in the fourth quarter after a revised 3.3% contraction in the third quarter. Fourth-quarter GDP sharply missed forecasts for 1.4% growth in a Reuters poll of economists. A recession is broadly defined as two consecutive quarters of contraction.
On a quarter-on-quarter basis, GDP slipped 0.1%, compared with a 0.3% rise expected in the Reuters poll.
For 2023, Japan’s nominal GDP grew 5.7% to reach 591.48 trillion yen, or $4.2 trillion, based on the average exchange rate that year, official data showed. On the other hand, Germany saw its nominal GDP grow 6.3% to reach 4.12 trillion euros, or $4.46 trillion, based on last year’s average exchange rate.
Nominal GDP measures the output value in current dollars without adjusting for inflation.
In response to the latest GDP release, the benchmark Nikkei 225 climbed 0.65% and briefly surpassed the 38,000 mark in the morning session, as investors saw the weak economic reading as a sign the Bank of Japan could delay its exit from the country’s long-standing hostile interest rate policy.

We had a case study on Macro economics in strategic management in IIM kashipur about the failure of Japan. If I put it very shortly, Japanese excessively stressed on manufacturing. They failed to globalize. They thought that if they manufacture good quality stuff efficiently, world will buy it preferably over the products of other nations. They invented JIT sort of technique for leadership in manufacturing. However, the problem with manufacturing leadership is that the best practices can easily be copied and replicated by others.
On the other hand, globalization focus on pulling all the factors of production like capital, know how, make how, manpower, raw material etc. from best possible sources and pull to gater to make the end product.
For example a car designed in Germany, engine is sourced from Japan, manufactured in India by a US company and loan taken to build factory from UK.

Japan legged behind in Globalization. Japanese' people's excessive nationalism was a mental block to shift production elsewhere.

One more reason was the rise of China as the factory of the world. The subject is wide. I have answered it in brief.
 
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We had a case study on Macro economics in strategic management in IIM kashi pur in macro economics about the failure of Japan. If I put it very shortly, Japanese excessively stressed on manufacturing. They failed to globalize. They thought that if they manufacture good quality stuff efficiently, world will buy it preferably over the products of other nations. They invented JIT sort of technique for leadership in manufacturing. However, the problem with manufacturing leadership is that the best practices can easily be copied and replicated. easily by others.
On the other hand, globalization focus on pulling all the factors of production like capital, know how, make how, manpower, raw material etc. from best possible sources and pull to gater to make the end product.
For example a car designed in Germany, engine is sourced from Japan, manufactured in India by a US company and loan taken to build factory from UK.

Japan legged behind in Globalization. Japanese' people's excessive nationalism was a mental block to shift production elsewhere.

One more reason was the rise of China as the factory of the world. The subject is wide. I have answered it in brief.

So its essentially scale. Because really Japan has all the ingredients you mentioned in-house.
 
If you can pull all the ingredients together to make it a success than it counts.

What I meant is that they already do have all the ingredients. Plus the work and quality ethic. The technology and the brains.

I believe they lack size. Land. Resources. Manpower. Aging population.

And yes, they very rarely trust outsiders to manufacture for them. Whether its Sony or Shimano or Honda. Or Takeda.

Their's is the problem of the perfectionist manager.

Cannot delegate.
 
What I meant is that they already do have all the ingredients. Plus the work and quality ethic. The technology and the brains.

I believe they lack size. Land. Resources. Manpower. Aging population.

And yes, they very rarely trust outsiders to manufacture for them. Whether its Sony or Shimano or Honda. Or Takeda.

Their's is the problem of the perfectionist manager.

Cannot delegate.

That is true.. Like their success can be traced back to their hard work and competence in manufacturing, their failure can be traced back to excessive nationalism, mental block to go global. Had Japan gone global 2 decades back, it would have been at least a 10 tr USD economy today.
 

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