"The Paradox of Yen Depreciation... German GDP to Surpass Japan Within a Few Years"

If the average USD-JPY exchange rate exceeds 137.06 yen, Japan ranks 4th
Japan falls to 'Cheap Japan' due to government financial easing

[Asia Economy Reporter Minji Lee] As the value of the Japanese yen continues to decline (Yen depreciation), an analysis suggests that within a few years, Japan's nominal Gross Domestic Product (GDP) will fall below Germany's, causing Japan's economic size ranking to drop from third to fourth in the world.

On the 22nd, major Japanese media cited research results from Hideo Kumano, chief economist at Dai-ichi Life Economic Research Institute, stating that if this year's average yen-dollar exchange rate exceeds 137.06 yen, the GDP rankings of Japan and Germany will immediately be reversed.

According to the International Monetary Fund (IMF) economic outlook, last year's nominal GDP was $4.3006 trillion (approximately 5311 trillion won) for Japan and $4.0311 trillion (approximately 4978 trillion won) for Germany.

[Image source=Yonhap News]

Economist Kumano explained that the IMF expects the GDP gap between the two countries to narrow to 6.0% this year, but if the yen depreciation continues, the ranking could be reversed as early as this year.

Japan's Sankei Shimbun evaluated, "The Bank of Japan, Japan's central bank, has aimed to improve the performance of export companies through large-scale monetary easing and yen depreciation since 2013, but the size of the Japanese economy based on the dollar has shrunk, making Japan 'cheap'." It added, "During this time, low income, low inflation, low interest rates, and low growth have persisted." It further noted, "Although Germany's inflation was also high last year, its hourly labor productivity was 60% higher than Japan's."