Preliminary 2023 GDP figures released by Japan's Cabinet Office showed that Japan's nominal growth rate surpassed China's for the first time since 1977.
Japan's economy grew at a nominal rate of 5.7%, while China's grew at 4.6%. The reversal comes as Japan begins to suffer from inflation while China faces deflationary pressures.
China's economy grew 5.2% in real terms. Real growth accelerated from the previous year, partly due to a rebound from 3% growth in 2022, when the economy contracted sharply due to the impact of the Covid-19 pandemic. However, nominal growth (taking into account inflation) slowed to 4.6% in 2023 from 4.8% in the previous year.
China's economy grew at an average annual nominal rate of about 12% from 2000 to 2022. Slowing nominal growth means slowing market expansion, which could impact the earnings of companies operating in China.
Countries like the US and Germany have nominal growth rates above 6%, making China's slowdown stand out compared to major developed countries outside Japan.
S&P Global Ratings expects earnings at rated companies in seven major Asia- Pacific countries - China, India, Indonesia, South Korea, Japan, Australia and New Zealand - to grow at 5% or less this year.
KHANH HUNG
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