DIGIVESTASI - Japan lost its title as the world's third-largest economy. The position went to Germany, and Japan is currently ranked 4th. Japan's downgrade occurred when the cherry blossom country was on the verge of an economic recession. Recession itself is a decline in the economy or negative economic activity that lasts more than two quarters of the year. 

Japan, once the world's second-largest economy, reported a decline in economic growth for two consecutive quarters. The economy contracted at an annualized rate of 0.4% in the fourth quarter of 2023, while the country previously recorded a decline of -3.3% in the third quarter of 2023. In light of the collapse of the Japanese economy, Japan's indicators in 2023 are as follows. 

Gross Domestic Product (GDP) 
Japan's GDP is not good. The economy actually grew throughout 2023, but contracted for two consecutive quarters. The economy fell by 0.4% on an annualized basis (YoY/YoY) in Q4 2023 after reporting a contraction of -3.3% in Q3 2023. Japan's nominal GDP in 2023 will grow by 5.7% compared to 2023. The amount is equivalent to about 591.48 trillion yen ($61.673 trillion). 

Inflation 
In fact, Japan's inflation in 2023 can be said to be relatively manageable. The highest inflation rate was recorded in April 2023 which reached 3.5%. Meanwhile, the inflation rate remained in the range of 3% to 3.5% from the beginning of the year to the third quarter. By the end of the year, Japan's inflation rate was below 3%, rising to 2.8% in November 2023 and 2.6% in December 2023. 

Domestic Consumption 
Japanese household spending decreased by 2.5% in real terms in December 2023 compared to the previous year. This decline was worse than the market consensus of a 2.1% decline. Meanwhile, household consumption in Japan also fell by 2.9% in November, marking the 10th consecutive month of decline. In Japan, household spending refers to the consumption of food, housing, utilities, health, and recreation.

In contrast, the savings rate of Japanese households is growing rapidly. By December 2023, the average Japanese person plans to allocate 60.30% of their income to savings. This figure is even higher than in November, when only 23.70% of Japanese income was converted into savings. As noted, the average personal savings rate in Japan since 1963 has been 13.16%. The highest savings record was recorded in June 2020, when the average Japanese saved 62.10% of their income.  

Bank of Japan Interest Rate 
The Bank of Japan will keep short-term interest rates unchanged at -0.1% at the end of 2023. This negative interest rate policy will continue until early 2024.

Unemployment 
Japan's unemployment rate fell to 2.4% in December 2023. This is lower than the unemployment rate in October which stood at 2.5%. As of December 2023, the number of employed people in Japan stood at 67.54 million, and the number of unemployed people stood at 1.56 million. There are 127 jobs per 100 job seekers.

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