Germany overtakes Japan to become third-largest economy

Economy

Published: 2024-02-15 19:28

Last Updated: 2024-04-14 01:05


Germany overtakes Japan to become third-largest economy
Germany overtakes Japan to become third-largest economy

Despite Japan's economy growing by 1.9 percent in 2023, Japan has fallen to fourth place globally, with Germany surpassing it to become the world's third-largest economy.

Japan's nominal Gross Domestic Product (GDP) for 2023 amounted to around USD 4.2 trillion, compared to Germany's approximately USD 4.5 trillion, figures revealed last month. 

The value of the yen declined by more than 18 percent against the dollar between 2022 and 2023, with its decrease reaching only about seven percent during the past year. This is partly attributed to the continued policy of the Bank of Japan, unlike other central banks around the world, in maintaining interest rates at negative levels.

While both the Japanese and German economies heavily rely on exports, Japan faces greater challenges due to labor shortages and declining population.

Forecasts indicate that India will surpass both Japan and Germany later in this decade to become the world's third-largest economy, thanks to its youthful population and high growth rates.

The Japanese economy experienced a contraction of 0.1 percent in the fourth quarter of 2023, contrary to expectations of achieving a 0.2 percent growth.

This marks the second consecutive quarterly decline in output, following a contraction of 0.8 percent in the quarter from July to September, according to official data. 

This contraction is the second in a row, as the economy shrank by 0.8 percent in the third quarter of 2023.