Japan's Paradox: Record Budget Set as GDP Per Capita Ranking Slides
As Japan's government prepares a record ¥122 trillion budget to tackle domestic issues, its global GDP per capita ranking falls to 24th, largely due to a weak yen. An analysis of Japan's economic crossroads.
AsJapanfinalizes a record-breaking budget proposal exceeding¥122 trillion, new data reveals the country's nominal GDP per capita has fallen to 24th globally, highlighting a complex economic picture shaped by domestic pressures and a persistently weak yen. The cabinet is expected to approve the plan onDecember 23rd}, which includes the first major hike in medical service fees in over a decade.
A Budget to Battle Demographic Headwinds
Prime MinisterFumio Kishida's administration is set to approve the draft budget for the next fiscal year following final ministerial negotiations today. The historic¥122 trillionfigure reflects the mounting costs associated with the nation's rapidly aging population. A key component of this spending is a2.22%overall increase in government-set medical service fees, the first such revision in12 years}. The move appears to be a direct response to ballooning social security expenditures in the super-aged society.
The Double-Edged Sword of a Weak Yen
Despite the massive fiscal outlay, external indicators paint a more challenging picture. According to the Cabinet Office,Japan's ranking for nominal GDP per capita has slipped two spots from22ndto24th. Reports suggest the primary driver behind the decline is the yen's weakness. While a cheaper yen can boost the competitiveness ofJapan}'s exporters, it also erodes the nation's economic standing in dollar terms and diminishes the real purchasing power of its citizens.
In a small measure aimed at easing consumer burdens, the government also announced it will lower the application fee for a10-yearpassport by¥7,000.
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