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Kathmandu. Japan’s economic growth slowed sharply in 2024, government data showed on Monday. The data comes as Japanese companies are worried about the impact of US President Donald Trump’s protectionist trade policies, import tariffs and other measures on the world’s fourth-largest economy.
Gross domestic product (GDP) grew by 0.1 percent in 2024, much lower than the 1.5 percent growth in the same period last year. But the October-December figures were brighter. The quarterly growth rate in October-December was 0.7 percent, down from 0.4 percent in July-September.
The quarterly growth rate in October-December reached 0.7 percent, amid warnings of the ‘most powerful earthquake in decades’. The 0.3 percent growth figure for the fourth quarter was also more than double market expectations. “On the surface, Japan’s GDP growth in the latter part of 2024 looks like a sign of improvement,” said Stephen Engrich of Moody’s Analytics. “Japan’s preliminary GDP figures are very weak and while improvements are normal, they need to be made significantly,” he said.
“The upbeat headline figures are providing some support for the still-sluggish domestic economy. Wage gains have outpaced inflation, which has been strong for three years,” Engrich said. “Given the deteriorating outlook for global trade, Japan will not be able to rely on exports to contain the slowdown in growth in 2025.” Trump last week said he planned to impose tariffs on imported cars starting April 2. The Daiwa Institute of Research said before releasing the latest GDP figures that “various growth factors, including normalization of automobile production, were seen.”
“A strong appetite for capital spending by corporations, and a rebound in domestic consumption were also positive factors,” the institute said in a report. Japan overtook Germany last year to become the world’s third-largest economy, and India was expected to overtake both countries by the end of the decade. Analysts said at the time that the change in stance mainly reflected the yen’s sharp decline against the dollar. The Bank of Japan (BOJ) raised interest rates in March for the first time in 17 years in January.
The move, which measured borrowing costs at their highest level since 2008, was also supported by “steadily” rising wages and “broadly stable” financial markets, the bank said. While other central banks have raised borrowing costs in recent years, the BOJ has stood apart. It finally raised rates above zero in March, signaling a shift away from Japan’s “lost decades” of economic stability and policies designed to combat stagnant or falling prices. “The rebound in GDP in the fourth quarter, while not comprehensive, supports our view,” Capital Economics said in a note on Monday. The Bank of Japan will tighten policy more aggressively this year than many had anticipated.”
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