Japan's Decline from the 5040 Club: A Cautionary Tale for South Korea
South Korea is on the verge of joining an elite group known as the '5040 Club', comprised of countries with a population exceeding 50 million and per capita income reaching $40,000. Currently, only five nations belong to this exclusive club: the United States, Germany, the United Kingdom, France, and Italy.
Japan was the first country in Asia to reach this milestone in the mid-1990s but has since fallen behind due to a declining per capita income. The Japanese yen's depreciation over several decades is largely responsible for this decline.
The Plaza Accord of 1985 and its subsequent reversal contributed to Japan's initial success, followed by a period of economic stagnation that lasted until the early 2000s. However, after the Great East Japan Earthquake in 2011, Japanese companies sold foreign currency assets, causing the yen to appreciate sharply.
In 2012, per capita national income reached $47,800, but former Prime Minister Shinzo Abe's Abenomics policies led to a decline in the yen's value. The global supply chain crisis and the U.S. Federal Reserve's interest rate hikes have further weakened the yen against the dollar.