The Japanese economy plunged into a recession in the fourth quarter of 2023 amid rising fuel and food prices and the weakening of its currency.
According to Sergio Rossi, professor of macroeconomics and monetary economics at the University of Fribourg in Switzerland, there are multiple reasons behind Japan’s current economic woes.
“Some of these factors are linked to a low birth rate and the structural lack of young workers, which foreign workers cannot compensate for entirely,” he explained. “Another series of factors stems from Japan’s relatively high dependence on imports to support economic growth, particularly as regards the energy sector.”
According to Rossi, the current Japanese government is seeking to rectify this situation by “trying to increase the birth rate and to make sure an increasing number of women work full-time,” as well as by seeking to “attract foreign direct investment, notably with regard to digitalization as well as for research and development activities.”
“However, this takes time and international competition across the global economy does not help Japan in this regard,” he pointed out.
“This has given rise to observable inflationary pressures across the market for produced goods and services, thereby reducing the purchasing power of Japanese consumers, mostly with regard to the middle class, which has a higher propensity to consume than the wealthy people,” he continued.
With the “consumption expenditures” in Japan slowing down as a result, the Japanese yen weakened, “thereby aggravating the domestic inflationary pressures stemming from a much higher cost for imported goods.”
“Japan’s economy has thus fallen into a vicious circle,” Rossi surmised.
Lifting these anti-Russian sanctions would actually “contribute to a recovery of Japan’s economy, particularly as regards energy prices and eventually the Japanese balance of trade,” he added.
So far, however, the powers that be in Japan appear content to follow the United States’ lead and wage a de facto economic war against Russia in the hope that the Russian economy might collapse.