The economies of both the United Kingdom and Japan have slipped into recession, with their gross domestic products (GDP) shrinking amidst challenging global conditions.
The United Kingdom’s Office for National Statistics (ONS) reported a 0.3 percent decline in GDP for December 2023, marking the country’s entry into recession. This downturn was attributed to decreases across all major sectors of the economy. However, compared to previous recessions, this is considered the “mildest recession” in 50 years, with a drop of over 1 percent sometimes seen in past downturns, according to BBC.
The ONS noted that hard-pressed households reduced spending in response to soaring interest rates and rising living costs. The GDP fell by 0.3 percent in the fourth quarter of 2023, making it the weakest annual change since the financial crisis in 2009, excluding the pandemic-affected year of 2020.
Meanwhile, inflation remained high at 4.2 percent in January 2024, consistent with the rate in December 2023. Jeremy Hunt, commenting on the report, emphasized the challenges posed by high inflation but expressed optimism about the economy’s prospects, highlighting forecasters’ expectations of strengthened growth in the coming years.
Similarly, Japan, the third-largest economy, unexpectedly entered a recession. The country’s GDP shrank at an annual pace of 0.4 percent in the fourth quarter of 2023, as reported by the cabinet office. This decline marked the third consecutive quarter of reduced household and business spending.
Domestic demand in Japan was notably weak, while external demand, represented by exports of goods and services, made a positive contribution to the economy. Additionally, the Japanese yen experienced a significant drop against the US dollar, reaching its lowest level in over 33 years.
Despite Japan’s status as the fourth-largest economy in the world in dollar terms last year, recent data suggests challenges ahead, especially with the yen’s depreciation against the dollar and ongoing economic uncertainties globally.
