Both Japan and UK have officially entered the dark tunnel of Economic Recession, after both countries announced a clear contraction in gross domestic product for the second time in a row. Which means that two of the world’s largest economies are suffering from contraction in growth for two consecutive quarters in what is known as a “technical recession”… There are questions about America’s economy.
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Due to the decline in population numbers… Japan is giving up its position as the third strongest economy in the world to Germany, while in Britain, the population growth rate and average wages are no longer sufficient to cover the deficit in the decline in citizens’ consumer spending.
Paul Donovan, chief economist at UBS Global Wealth Management, stated that the economic contraction in Japan is linked to a shrinking population. The country’s population fell by 800,000 people in 2022, the fourteenth consecutive year of contraction.
Donovan said this limits the country’s ability to grow; Because it means that “fewer people make and consume fewer things.”
Donovan added that the reality in the United Kingdom looks different, as population growth and average wages are no longer enough to stave off a decline in consumer spending, one of the main drivers of the economy.
News of the recession in both Japan and Britain has drawn attention to the world’s first economic power. Will it be the United States of America’s turn soon?
The US economy is on a different path… but the specter of recession is not far away
White House economic adviser Lael Brainard said at the National Association for Business Economics conference in Washington:
The US economy is moving on a radically different path from Britain and Japan thanks to new business creation, strong consumer spending, and support for infrastructure spending and clean energy investment.
Some experts believe that the US economic situation is more stable, as the past two quarters have witnessed much higher-than-expected growth in gross domestic product, due in large part to strong consumer spending. This is despite the decline in retail sales last January.
The labor market also witnessed stability according to indicators of the unemployment rate in the country, which remained below 4% for 24 consecutive months.
Although a number of experts agree that the American economy will not slide into recession this year, there are warnings of a possible recession. Because, they say, economic shocks may come unexpectedly, as happened in the global pandemic crisis.
Experts have warned of a possible recession scenario in the United States if the Federal Reserve does not cut interest rates at all this year.
Unexpected decline indicators in Japan and Britain led to their entry into economic recession
Government data showed Japan’s gross domestic product fell 0.4 percent year-on-year in the October-December quarter after a 3.3 percent decline in the previous quarter, missing market expectations for a 1.4 percent increase.
The latest data from the British Office of National Statistics (ONS) also showed that the gross domestic product contracted by 0.3 percent between October and December. This is after negative economic growth of 0.1 percent in the three months from July to September.
This is the largest contraction of its kind since the first quarter of 2021.
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Source: CNN
