Japan in recession, but Nikkei 225 index at highs

The Japanese economy unexpectedly found itself in recession, recording a second consecutive quarter of quarter-on-quarter decline in GDP growth in the fourth quarter of 2023. However, this did not stop the boom on the Tokyo stock exchange. The Nikkei index broke the barrier of 38000 points.

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Japan is in recession but the stock market is doing well

In the fourth quarter of 2023, Japan's Gross Domestic Product (GDP) unexpectedly decreased by 0,1%. Q/Q, which is a significantly worse result than market forecasts, which assumed a GDP growth of 0,3%. K/K. Additionally, the data for the third quarter was revised downwards. Ultimately, GDP dropped by 0,8 percent, while earlier data showed a decline of 0,7 percent.

Japanese GDP on an annualized basis fell by 0,4% in the last quarter, compared to an expected growth of 1,4%. and against a decline of 3,3%. in the third quarter of 2023.

The data published tonight may delay the moment of departure Bank of Japan from ultra-loose monetary policy. This, in turn, has a positive impact on the mood on the Tokyo Stock Exchange, where today company shares rose in price, and the Nikkei index increased by 1,2% and broke the barrier of 38000 points. and improved recent records.

Daily chart of JP225 (CFD on the Nikkei 225 index). Source: Tickmill

These weaker-than-expected Japanese GDP data have another dimension. Japan's economy is no longer the third largest economy in the world. It lost its place on the economic podium to Germany.

In 2023, Japan's Gross Domestic Product increased nominally by 5,7%. to 4,2 trillion US dollars, while Germany's GDP increased nominally by 6,3%. to USD 4,46 trillion.