Japan’s Position as the Third-Biggest Economy in the World Is Lost

Japan now boasts the fourth-largest economy in the world. Following a contraction in its GDP in the final quarter of 2023, it lagged behind Germany. The economy of Japan decreased from October to December at an annual pace of 0.4 percent, according to data released by the government on Thursday. It decreased by 2.9% between July and September. A recession is thought to have entered an economy when there has been shrinkage for two quarters in a row. A country’s real gross domestic product is a gauge of the worth of its goods and services. The annual rate calculates the outcome of applying the quarterly rate to a full year.

 

Up until 2010, when China’s GDP overtook Japan’s, it was the second biggest. Prior to falling behind Germany, its economy was the third largest. Japan’s nominal GDP was $4.2 trillion in the previous year. It ranged between $4.4 to $4.5 trillion for Germany. Nominal GDP does not account for inflation; real GDP does. The decline to fourth place was mostly caused by the weakening of the Japanese yen. However, analysts claim that declining productivity and competitiveness, together with a shrinking population, are also contributing factors to the reduction. Japan used to be referred to as “an economic miracle.” Following the devastation caused by World War II, the nation emerged as the second largest economy globally, surpassing that of the United States.

 

Strong small- and medium-sized enterprises with high productivity drive the economies of Germany and Japan. The economy of Germany has grown significantly over the last 20 years. It has dominated global markets for high-end goods including industrial gear and luxury automobiles. Its exports to the rest of the world accounted for half of its GDP. However, the German economy contracted by 0.3 percent in the most recent quarter. For many years, Japan’s population has been aging and declining. There are hardly many foreign residents there. The population of Germany is now close to 85 million. Due to immigration, Germany’s low birth rate was somewhat offset.

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