A Tokyo-based research institute said that Japan's gross domestic product per capita will fall behind that of South Korea in 2027 and Taiwan in 2028 and long-term low productivity due to slow progress in digitalization of the world's third-largest economy.
According to estimates released last month by the Japan Center for Economic Research and the Japan Center for Economic Research, the nominal GDP is projected to be $46,519 in South Korea in 2027 and $47,305 in Taiwan in 2028.
The biggest obstacle for Japan's economic growth is its low birthrate and aging population, but South Korea and Taiwan are in much the same case on that point, so the difference comes from their productivity and efforts for digitalization, said Atsushi Tomiyama, principal economist at the research institute.
Japan's growth rate from 2021 to 2035 is projected to be 2.0% on average each year, less than 4.1% for South Korea and 4.2% for Taiwan, according to the projections that covered 15 Asian nations, including the United States, Canada and Australia.
The research body said that the GDP per capita was $39,890 in Japan, $31,954 in South Korea and $28,054 in Taiwan in 2020.
In a recent online interview with Kyodo News, Tomiyama said that tech giants such as Samsung Electronics Co. of South Korea and Hon Hai Precision Industry Co. of Taiwan are serving as a driving force for growth.
Since 2000 s, South Korea has been known for its promotion of electronic government services and Taiwan has made steady progress in digitalization under its digital minister Audrey Tang, Tomiyama said.
Japan is behind in making good use of technology to improve efficiency, as Japanese people stick too much to traditional ways to use traditional hanko seals and fax machines, Tomiyama said. The Japanese value fairness above efficiency means that the government would have to think of people who are not really affected by digital tools at first. When the JCER released its estimates in December 2020, Japan's GDP per capita was projected to be higher than those of South Korea and Taiwan until 2035 at the earliest, Tomiyama said.
The research firm predicts that China's nominal GDP will be $35.84 trillion in 2033, surpassing $35.82 trillion for the US in the same year to make it the world's largest economy, four to five years later than the previous forecast.
The US is expected to return to the top spot in 2056, since the U.S. economy will likely maintain its population and productivity, while China s dwindling population will weigh on its economic growth.