From 1990 to 2006, the Japanese and Germans had the same effective purchasing power on average.
In 2021, the average German was over 1/3 better off than their Japanese peers.
As a result of these trends, Germany’s economy may well overtake that of Japan in size towards the end of this decade 📈
First in nominal GDP – subject also to currency exchange rates – where the German economy is already 90% the size of Japan’s;
And bit later also measured in PPP, where it stands at 85% (compared to 75% in 1990).
In general, there’s lots of countries that Germany has outgrown in the last three decades – many of which also ought to grow faster to catch up, but have actually fallen further behind.
Quite remarkable if one knows the German discourse which hardly ever tires of jeremiads about industrial decline and the fall of a superstar and whatnot.
The opposite is the case. The superstar is still ascending.
@benbawan The "muh industrial decline" trolls are fixating on the one part of the German economy - unusually high share of heavy industry in GDP and employment - that is most like that of Italy.
@Alon True, but even t here they miss the forest for the trees. Germany’s industrial prowess and employments has been astonishingly resilient (some would even say, too resilient – some production probably ought to move). Manufacturing share going down is normal and, to some degree, even healthy.
@Alon Would be pretty weird if you needed the same number of people to produce the same number of cars after 30 years of R&D and capital investment. We wouldn’t want that, would we?
@Alon For what it’s worth, manufacturing as a share of value added in GDP has barely budged in Germany in over two decades (!) – and in the years before that, it also mainly dropped due to Eastern German industries being wound down.
@Alon But the share itself doesn’t tell you much, it’s a mirage. It has also been relatively stable in Japan and even in Italy, it hasn’t fallen by that much lately – yet all these countries have had wildly different growth profiles overall.
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