The latter three months of 2023 saw a drop in the Gross Domestic Product (GDP), which signalled the formal start of the recession in the UK and Japan.
The Office for National Statistics (ONS) reported that the UK’s GDP shrank by 0.3% in the final three months of 2023, from October to December, after declining by 0.1% in the preceding quarter, from July to September, according to First Post.
According to government data released on Thursday, Japan’s gross domestic product (GDP) shrank by an annualised 0.4% during the October–December quarter following a 3.3% decline in the prior quarter.
This confused market expectations of a 1.4% rise. “What’s particularly striking is the sluggishness in consumption and capital expenditure that are key pillars of domestic demand,” said Yoshiki Shinke, senior executive economist at Dai-ichi Life Research Institute.
According to the figures, Japan’s nominal GDP in 2023 was $4.21 trillion, less than the $4.46 trillion needed for Germany to be the fourth-largest economy in the world.
Economist Neil Newman told the BBC that this is because the Japanese yen is weaker than the US dollar.
Japan might reclaim its position, according to Newman, should the yen strengthen.
Over half of economic activity is accounted for by private consumption, which decreased by 0.2% against market expectations of a 0.1% increase due to increased living expenses and mild weather deterring people from dining out and purchasing winter clothing.
Another important driver of private sector development, capital spending, decreased by 0.1% versus expectations of a 0.3% increase.
Britain’s economy is just 1% higher than it was in late 2019, prior to the COVID-19 epidemic; among the G7, only Germany is doing worse.
All of this is happening in the context of the anticipated election this year, in which Prime Minister Rishi Sunak has pledged to accelerate growth.
Among his main promises to voters last year was to get the economy growing.
With a reputation for economic acumen, his Conservative Party has ruled British politics for the majority of the last seven decades. Opinion polls, however, indicate that Labour is now more trusted when it comes to the economy, opening new tab.
Between one general election and the next, British households are expected to experience their first decline in living standards since the Second World War.
