G7's Japan and UK hit by recession; Risk of global recession rises

Tokyo/London – After the start of the Russia-Ukraine war, the economies of the ‘G7’ group, which have been warning of weakening the Russian economy by imposing sanctions on the country, are weakening. A few days ago, it became evident that Europe’s top economy, Germany, has slipped into recession. Now, both Japan and the UK have also been hit by recession. After the economy’s decline, Japan lost its position as the world’s third-largest economy, and the media indicated that the challenge facing the UK was becoming more serious.

Japan’s economy contracted for two consecutive quarters last year. Japan’s economy shrank 3.3 percent in July to September 2023 and 0.4 percent in October to December 2023. Issues like increases in the prices of essential goods, salary cuts, the decline in demand for products, the shortage of workforce as a result of the falling birth rate, and an ageing population are said to be the reasons for the recession.

Japan’s GDP has slipped from $4.5 trillion to $4.2 trillion due to its decline in two consecutive quarters. Due to this, Japan has lost its position as the third-largest economy in the world. Germany’s GDP, which has suffered from economic recession since before Japan, has reduced to 4.4 trillion dollars. ‘Germany leaving Japan behind highlights the need for strategic reforms in the Japanese economy. It includes encouraging more women in regular jobs and removing barriers to foreign investment.’ Japan’s Minister of State for Trade and Industry, Yoshitaka Shindo, said, hinting at new provisions.

After Japan, the UK, which is a part of ‘G7, ‘ was also hit by the economic recession. The UK economy shrank by 0.3 per cent in the quarter from October to December 2023. Before that, the UK economy had slipped 0.1 percent in the July to September quarter. The ‘Office of National Statistics (ONS) has announced that an economic recession has hit the UK due to the decline in two consecutive quarters. The UK economy is expected to be hit by a recession due to the poor performance of the services, production and manufacturing industries.

There are also indications that the slowdown in the UK’s economy will add to the difficulties faced by Prime Minister Rishi Sunak. After assuming the reins of the post of Prime Minister last year, Sunak declared that giving impetus to the economy would be a priority. However, the opposition is criticizing this as the ‘Sunak Recession’ due to losses caused by the recession. UK’s Finance Secretary Jeremy Hunt has rejected it. He stated that the economy is on a positive trend, and reducing inflation is the main objective. Prior to this, UK’s economy had declined by 22.5 percent during the Corona period.

After Germany and Japan, the UK has become the third country of the ‘G7′ to be hit by the recession. The pace of other G7 countries’ economic growth has slowed, yet the recession has not yet caused damage. The economies of these four countries, France, Italy, Canada, and the US, have registered positive growth. Germany, Japan, and the UK are closely connected from a trade point of view. However, China’s economy has also started declining, and it seems to be hurting these countries too. After the crisis in China, the top three countries faced a recession. Therefore, some analysts have expressed concern that this may increase the possibility of recession, causing damage to the global economy.

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