Sunday, November 14, 2010

Japanese Economy Grows... Nominal GDP Back to 1993 Levels

Bloomberg reports:

Japan’s economy grew more than forecast in the third quarter as consumer spending increased, shielding the expansion from a stronger yen and export slowdown likely to have a greater impact this quarter.

Gross domestic product rose an annualized 3.9 percent in the three months ended Sept. 30, following a revised 1.8 percent expansion in the previous quarter, the Cabinet Office said in Tokyo today. In nominal terms, the economy grew 2.9 percent.
The article goes on to detail that a lot of the growth was due to a purchases of fuel-efficient cars ahead of an expiration of a subsidy.

Longer term we see the remarkable fact that Japanese GDP in nominal terms is right where it was in Q3 1993 (yes 17 years ago), while real GDP is just 18% higher over that same time frame (less than 1% annualized growth).

Source: ESRI


  1. Very nice chart. Perfect demonstration of the lost decade(s) of Japan. Unfortunately on the Bloomberg report, they went on saying that after these one-off stuff, the economy will slow, so...

    Also sprach Analyst

  2. Devil's advocate here.

    A comparison b/w US & Japanese real GDP growth below. This does not take population growth into consideration.

    US population has been growing at around 1% and Japan has been flat. This 1% has to be subtracted from US real growth rate to make the data comparable on a per-capita basis. The graphs don't seem too different when comparing apples to apples.

  3. huge difference actually.

    1) since Q3 1993, the US has grown 2.6% annualized in real terms compared to less than 1% for Japan
    1)b) subtracting 1% population growth = 0.6% more growth per year
    1)c) this alone means per capita GDP is 10% higher in the US or about 10 years worth of growth for Japan in real terms

    2) in nominal terms it is even more stark (nominal matters for nations with debt as we were able to inflate our way out of a lot of the debt, but japan has not) with US growth at 4.6% annualized since Q3 1993 compared to 0% for Japan.
    2)b) taking out population growth, nominal GDP per capita is 80%+ since Q3 1993 in the US vs. flat for Japan