Germany Overtakes Japan to Become the Third-Largest Economy in the World

As its GDP shrank to half that of Germany in 2023, Japan’s dropped to the position of the fourth biggest in the world, according to Deepak Jasani, Head of Retail Research at HDFC Securities. Japan’s nominal GDP was around 591 trillion yen, or $4.2 trillion, last year. He noted that Germany’s was $4.4 trillion, or $4.5 trillion, depending on the currency translation, and that it was disclosed last month.

According to Cabinet Office figures on real GDP, the Japanese economy fell at an annual pace of 0.4 percent during the most recent quarter that spanned from October to December, down 0.1 percent from the previous quarter. According to him, the real GDP increased by 1.9 percent in the year.

This comes after the third quarter’s contraction of 3.3%. According to him, a technical recession is defined as two quarters of decline in a row. Japan’s GDP declined for two quarters in a row before it suddenly entered a recession, the BBC reported. (Also Read: 9 Notable Indian Harvard Alumni: Learn About Their Education & Current Careers)

In comparison to the same period in the previous year, the gross domestic product (GDP) of the nation shrank by a less favorable 0.4 percent in the last three months of 2023. It followed a 3.3 percent contraction of the GDP in the preceding quarter.

According to data from the Cabinet Office, Japan may have lost its ranking as the third-largest economy in the world to Germany, the BBC said. The fresh data was predicted by economists to demonstrate that Japan’s GDP increased by more than 1 percent during the fourth quarter of the previous year.

According to a BBC story, the International Monetary Fund (IMF) predicted in October that, as measured in US dollars, Germany will likely surpass Japan as the third-largest economy in the world.

The IMF will not announce a change in its rankings until both nations have released their final estimates of their rates of economic growth. In 1980, it started releasing statistics that compared economies.

According to economist Neil Newman, Germany’s GDP was valued at $4.4 trillion in 2023, while Japan’s was estimated to be worth $4.2 trillion (£3.3 trillion) in 2023.

According to the BBC, Newman said that this was because of how weak the Japanese yen was compared to the US dollar. If the yen strengthens, the nation may move back up to the third rank.

This month, at a press conference in Tokyo, Gita Gopinath, the deputy chief of the IMF, said that the yen’s about 9 percent decline versus the US dollar last year was a significant factor in Japan’s possible decline in the rankings.

Nonetheless, since Japan’s exports, like automobiles, are more affordable in foreign markets, the weakening of the yen has contributed to an increase in the share prices of some of the largest Japanese corporations.

The Nikkei 225, Tokyo’s primary stock index, broke the 38,000 threshold this week for the first time since 1990, when a decline in real estate values precipitated an economic disaster. According to the BBC, the Nikkei 225 reached a record high of 38,915.87 on December 29, 1989.