Money Matters, Simplified.
Japan's economy contracts as China surges ahead
by Anter Prakash Singh - February 14, 2011 - comments
The contraction in the country’s economy is the first in the past five quarters and it has brought down the economy to $5.47 trillion, said the Japanese Cabinet Office.
Japan’s gross domestic product (GDP) fell by 0.3 percent in the last quarter of 2010. At an annualized rate, the economy shrank by 1.1 percent from the previous quarter. Japan has also been left behind by China,which has now become the second largest economy of the world.
The fall in GDP could be a result of the end of the subsidy given by government on eco-friendly cars in the country.
The analysts have expressed hope that the economy will do better during the rest of the current year.
Though the Japanese economy contracted in the last quarter of 2010, it expanded by 3.9 percent overall as compared to the last year. May be it was part of the recovery process from the global recession that hit the world plunging it into an economic crisis.
Japanese economy shrinking
The contraction in the country’s economy is the first in the past five quarters and it has brought down the economy to $5.47 trillion, said the Japanese Cabinet Office.
Compare this with the Chinese economy which stands at $5.88 trillion and is still growing at a fast pace. The figures bear testimony to the fact that China is fast becoming an economic super power.
Only last year it surpassed Japan to become the second largest economy after the United States. Just five years ago China’s GDP stood at $2.3 trillion, half of that of Japan’s.
On the other hand, Japanese economy has remained at a standstill for the last two years.
The country had remained the world’s second largest economy for the last four decades after United States. In the 80s economists were even talking about the possible overtaking of the U.S. economy by Japan due its fast economic growth at that time.
Japan showing signs of recovery
But now with a mature economy and an aging population, Japan is losing out to China.
Though China's economy is growing at a fast pace even, the per capita income remains $3,600 which is less than one tenth of that of America and Japan.
Though the Japanese economy contracted in the last quarter of 2010, it expanded by 3.9 percent overall as compared to the last year. May be it was part of the recovery process from the global recession that hit the world plunging it into an economic crisis.
The Japanese government said in its economic assessment that its economy could bounce back due to the increased exports and factory outputs as a result of strong demand from China and other countries in Asia.
Economy minister of Japan, Kaoru Yosano told reporters, “While weakness will remain for the time being, the Japanese economy is expected to pick up on improvements in overseas economies and efforts of government policy steps.”