California’s economy reaches Japan

(MENAFN) California's economy has surpassed Japan's to become the fourth-largest in the world, according to a recent announcement from Governor Gavin Newsom’s office. The state's nominal GDP reached $4.1 trillion in 2024, outpacing Japan's $4.02 trillion, based on data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis. California now follows the United States ($29.18 trillion), China ($18.74 trillion), and Germany ($4.65 trillion) in the global economic rankings.

Governor Newsom proudly declared that California is "setting the pace" in the global economy. The state's economy grew by 6% last year, outpacing the US (5.3%), China (2.6%), and Germany (2.9%). Over the past four years, California's economy has averaged a growth rate of 7.5%.

Experts credit California’s impressive growth to its flourishing technology, entertainment, and clean energy sectors. Additionally, the state leads in manufacturing, agriculture, and tourism, contributing to its rapid economic expansion. With a population of nearly 40 million, California is the most populous state in the US.

In contrast, Japan’s economy faces significant challenges. Despite a small GDP increase in the last quarter, the IMF has downgraded its growth forecast for 2025 to just 0.6%, down from an earlier estimate of 1.1%. Japan’s economic struggles are attributed to factors such as a shrinking workforce, low labor productivity, and rising commodity prices. Analysts from Deloitte warn that Japan's economic fundamentals remain weak, and without substantial reforms, the country’s long-term economic outlook will continue to decline. Furthermore, US tariffs on Japanese exports, including a 24% duty imposed by President Trump, may exacerbate Japan’s economic difficulties.

Meanwhile, California has taken action against these tariffs, becoming the first state to sue the Trump administration over the new duties, arguing they would negatively impact industries vital to the state, including agriculture and technology.

However, despite its economic success, California faces significant social challenges. The state’s poverty rate increased from 11.7% in 2021 to 13.2% in early 2023. Nearly a third of California residents live at or near the poverty line. Homelessness continues to be a critical issue, and voter frustration over the state's inability to effectively address the crisis is growing. Recent polls indicate that more than a third of California voters support local laws allowing police to arrest people camping outside if they refuse shelter.

MENAFN28042025000045015687ID1109480426