‘Cheap Japan’ falling fast on global economy tables

TOKYO – No Japanese leader wants to preside over a bad milestone — like your economy dropping from No 3 to No 4 globally.

Welcome to Prime Minister Fumio Kishida’s hellish 2024. Barely six weeks in, Kishida’s Liberal Democratic Party is struggling to spin Japan’s falling behind Germany’s gross domestic product (GDP) in US dollar terms and the LDP’s culpability for this symbolic changing of the guard.

Kishida’s party is also giving Chinese leader Xi Jinping something of a much-needed soft power win. At a moment when Beijing is struggling to tame a property crisis, head off deflationary forces, restore confidence in the stock market and address record youth unemployment, news that it is pulling further ahead of arch-rival Tokyo sure is making for a welcome positive news cycle.

Japan, meanwhile, entered 2024 in recession. GDP contracted an annualized 0.4% in the October-December period after a 3.3% retreat in the previous quarter. “Japan’s economy is in poor shape,” says Stefan Angrick, senior economist at Moody’s Analytics.

Yet that’s true, too, of the longer-term trajectory as Germany surpassing Japan indicates.

Granted, this change in the league tables might rock Tokyo a bit less than China blowing past Japan’s annual output. Depending on which data set you use, that happened in 2010 or 2011, somewhere between the premierships of Naoto Kan and Yoshihiko Noda, and set the stage for the LDP’s return to power in 2012.

At the time, premier Shinzo Abe didn’t exactly sell his return to power as a beat-China mission. But so-called “Abenomics” was indeed a reformist retort to China becoming the world’s No 2 and Japan relegated to third place.

Sadly, the Abe era prioritized weakening the yen over reviving Japan’s once-vaunted