Japan loses its position as the world’s third-largest economy, Germany takes over

Japan has slipped to the world’s fourth-largest economic system as it fell behind the dimension of Germany’s in 2023, says Deepak Jasani, Head of Retail Research, HDFC Securities.

Japan’s nominal GDP totalled $4.2 trillion final 12 months, or about 591 trillion yen. Germany’s, introduced final month, was $4.4 trillion, or $4.5 trillion, relying on the foreign money conversion, he added.

For the newest October-December quarter, the Japanese economic system shrank at an annual charge of 0.4 per cent, and minus 0.1 per cent from the earlier quarter, based on Cabinet Office information on actual GDP. For the 12 months, actual GDP grew 1.9 per cent from the earlier 12 months, he stated.

This follows a 3.3 per cent contraction in the third quarter. Two consecutive quarters of contraction are extensively thought of a technical recession, he added.

Japan has unexpectedly fallen right into a recession after its economic system shrank for 2 quarters in a row, BBC reported.

The nation’s gross home product (GDP) contracted by a worse-than-expected 0.4% in the final three months of 2023, in comparison with a 12 months earlier.

It got here after the economic system shrank by 3.3 per cent in the earlier quarter.

The figures from Japan’s Cabinet Office additionally point out that the nation could have additionally misplaced its position as the world’s third-largest economic system to Germany, BBC reported.

Economists had anticipated the new information to point out that Japan’s GDP grew by greater than 1% in the fourth quarter of final 12 months.

In October, the International Monetary Fund (IMF) forecast that Germany was more likely to overtake Japan as the world’s third-largest economic system when measured in US {dollars}, BBC reported.

The IMF will solely declare a change in its rankings as soon as each nations have printed the last variations of their financial progress figures. It started publishing information evaluating economies in 1980.

Economist Neil Newman informed the BBC that the newest figures present that Japan’s economic system was price about $4.2tn (£3.3tn) in 2023, whereas Germany’s was $4.4tn.

This was as a result of the weak point of the Japanese foreign money in opposition to the greenback and that if the yen recovers, the nation may regain the quantity three spot, Newman added, BBC reported.

At a press convention in Tokyo this month, the IMF’s deputy head, Gita Gopinath, additionally stated an necessary motive for Japan doubtlessly slipping in the rankings was the yen falling by about 9 per cent in opposition to the US greenback final 12 months.

However, the weak point of the yen has helped to spice up the share costs of a few of Japan’s greatest firms as it makes the nation’s exports, such as vehicles, cheaper in abroad markets.

This week, Tokyo’s fundamental inventory index, the Nikkei 225, crossed the 38,000 mark for the first time since 1990, when a collapse in property costs triggered an financial disaster. The Nikkei 225’s document excessive of 38,915.87 was set on 29 December 1989, BBC reported.

(With inputs from IANS)