YEREVAN (CoinChapter.com) — The UK and Japan slipped into recessions towards the close of last year, primarily due to reduced consumer spending adversely impacting their economies.
This downturn in the two significant economies stands in stark contrast to the robust performance of the US economy. In the fourth quarter of 2023, the US economy expanded at an annualized rate of 3.3%, surpassing economists’ expectations of 2%.
The UK slips into recession ahead of elections
In what comes as a major blow to British PM Rishi Sunak, the United Kingdom has slid into shallow recession, according to the latest figures.
Data from the Office for National Statistics (ONS) reveals that the Gross Domestic Product (GDP) took a sharper-than-expected dip of 0.3% in the fourth quarter. This not only surpassed economists’ predictions of a 0.1% decline but also follows a previously reported 0.1% decrease in the preceding quarter.
Economists typically define a technical recession as two consecutive quarters of economic contraction. The relatively modest scale of these declines in the UK, suggests more of a stagnation scenario rather than a full-fledged downturn for the UK economy.
Nevertheless, this development may intensify pressure on the Bank of England to consider lowering interest rates. The apex bank has been holding the interest rate at a 16-year high of 5.25%.
Following the release of the news about the UK being in recession, the pound weakened against the dollar.
The latest ONS figures stand in stark contrast to Prime Minister Sunak’s assurances of economic growth. Data indicates that the UK experienced stagnation during his first full year in office. The Fourth-quarter GDP was down 0.2% compared to the previous year. Moreover, the overall growth for 2023 stands at a mere 0.1%.
Before heading to 10 Downing Street, Sunak also served as the Chancellor of the Exchequer. The current figures come as a huge blow to his party ahead of the general elections later this year.
Japan No longer the third-largest economy
Meanwhile, Japan also reported contractions in its economy, casting a shadow on the Asian giant’s fiscal health amid the recession.
Gross domestic product (GDP) in the country shrank at an annualized pace of 0.4% in Q4 of 2023, according to the Cabinet Office data.
The decline followed an annualized 3.3% dio in the previous quarter. The performance of the Japanese economy fell below economists’ expectations, who had predicted a 1.4% quarterly growth.
The recession has also cost Japan its spot as the third-largest economy in the world. With a GDP of $4.2 trillion, it currently stands behind the US, China, and Germany.
The Japanese Yen has also continuously slipped against the USD, making it one of the worst-performing among major currencies.
