Bloomberg: "Japan's GDP to Peak in 2028... Likely Lower Than 2019"

"Japan's GDP in 2028 to be 2.7% Lower than in 2019"
If Productivity Fails to Improve Through Structural Reforms, Economy Faces Negative Growth
Increased Pressure on Japan's Next Prime Minister

[Asia Economy Reporter Naju-seok] Japan's economy is expected to show a continuous recovery over the next 10 years following the COVID-19 pandemic, but its gross domestic product (GDP) at its peak in 2028 is projected to fall short of the 2019 level. Without structural reforms, even overcoming COVID-19 will not allow the economy to return to pre-crisis levels. Due to the lack of results from the structural reforms promised by Prime Minister Shinzo Abe, the shoulders of his successor, to be decided next week, have become even heavier.

Suga Yoshihide, Japan's Chief Cabinet Secretary, who is likely to be elected as Japan's next Prime Minister [Image source=Yonhap News]

Yuki Matsushima, Senior Economist for Japan at Bloomberg Economics, stated in a report released on the 8th that "Japan's economy will show signs of recovery after COVID-19," but also forecasted that "even if GDP peaks in 2028, it will be 2.7% lower than the 2019 GDP." Furthermore, due to factors such as population decline, the economy is expected to experience trend negative growth repeatedly, with GDP in 2050 projected to be 15.7% lower than in 2019.

Japan's economy has rapidly deteriorated after COVID-19. The Cabinet Office of Japan announced that Japan's GDP in the second quarter of this year shrank by -7.9% compared to the previous quarter. When annualized, this corresponds to a -28.1% growth rate. This is worse than the preliminary figure of -7.8% (-27.8% annualized) announced last month. Such negative growth is the worst performance since World War II.

Economist Matsushima evaluated the forecast data by saying, "It is because Japan's economy has failed to push forward structural reforms." In an environment of a declining population, if a way to increase productivity is not found, it will be difficult to expect economic growth similar to the past ever again.

Japan's structural reforms remain sluggish. Prime Minister Abe, who held long-term power for nearly eight years, proposed Abenomics as a remedy for Japan's economy, represented by three arrows: 'bold quantitative easing,' 'flexible fiscal spending,' and 'macroeconomic structural reforms.' While he enthusiastically pursued reforms with the aim of revitalizing Japan's economic growth engine, the structural reforms are evaluated as having failed to produce visible results.

This content was produced with the assistance of AI translation services.