Japan's GDP per Capita Slips to 24th as Weak Yen, Record Budget Signal Economic Strain
Japan's GDP per capita ranking falls to 24th, largely due to the weak yen. The government counters with a record ¥122 trillion budget and a strategic bet on deep-sea rare earth mining.
Japan's global economic standing has taken another hit, with its nominal GDP per capita falling two spots to 24th in the world, according to the latest Cabinet Office data. The primary driver is a relentlessly weak yen, which has eroded the dollar-denominated value of the nation's output and raised serious questions about its long-term competitiveness.
Record Spending Meets Rising Consumer Pain
In response, Tokyo is preparing to deploy its largest-ever national budget, a staggering ¥122 trillion, in an attempt to stimulate the sluggish economy. However, this massive fiscal push is running into headwinds on the ground. A recent government ban on pork imports from Spain, following an outbreak of African Swine Fever, threatens to create new supply chain bottlenecks and drive up prices for products like cured ham, adding to consumer anxiety.
A High-Stakes Bet on Deep-Sea Riches
Facing these challenges, Japan is looking to the deep sea for a strategic breakthrough. The government is moving forward with a plan to exploit vast rare earth mineral deposits off the coast of Minamitorishima, the country's easternmost island. A crucial test to extract mineral-rich mud from the seabed is scheduled for this January. The project represents a long-term strategy to secure a domestic supply of materials critical for high-tech industries and reduce its heavy reliance on foreign imports.
Will Cooling US Inflation Offer a Reprieve?
A potential variable in Japan's economic equation has emerged from the United States. The latest U.S. Consumer Price Index (CPI) for November came in below market expectations, rising just 2.7% year-over-year. This sign of cooling inflation could give the Federal Reserve more room to consider rate cuts, which would narrow the interest rate differential with Japan and could potentially offer some relief to the beleaguered yen.
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