Japan’s economy shrank in the final quarter of 2023, lagging behind Germany to become the fourth largest in the world.
According to Cabinet Office figures on real GDP, the government reported that the economy contracted at an annual pace of 0.4% from October to December 2023, despite growing 1.9% during that same period. It shrank 2.9% from July to September. A contractionary economy for two quarters in a row is regarded as a sign that the economy is technically in a recession.
China’s economy surpassed Japan’s as the second largest in 2010, however. Germany’s nominal GDP last year was USD 4.4 trillion, or USD 4.5 trillion, depending on the currency translation, whereas Japan’s was USD 4.2 trillion.
Since nominal GDP comparisons are made in terms of dollars, the decline to the fourth position was primarily caused by a weaker Japanese yen. However, Japan’s population decrease, lagging productivity, and lack of competitiveness are also contributing factors to its relative weakness.
Japan’s economic ascent from the ashes of World War II to become the world’s second-largest economy behind the US was long hailed as an economic miracle. That continued until the 1970s and 1980s. The economy has, however, mostly remained in a state of stagnation for the past 30 years from the start of the financial bubble collapse in 1990, growing only little at periods.
Solid productivity from small and medium-sized firms drives the economies of Germany and Japan.
Japan’s economy shrank in the final quarter of 2023, lagging behind Germany to become the fourth largest in the world.
According to Cabinet Office figures on real GDP, the government reported that the economy contracted at an annual pace of 0.4% from October to December 2023, despite growing 1.9%
during that same period. It shrank 2.9% from July to September. A contractionary economy for two quarters in a row is regarded as a sign that the economy is technically in a recession. China’s economy surpassed Japan’s as the second largest in 2010, however. Germany’s nominal GDP last year was USD 4.4 trillion, or USD 4.5 trillion, depending on the currency translation, whereas Japan’s was USD 4.2 trillion.
Since nominal GDP comparisons are made in terms of dollars, the decline to the fourth position was primarily caused by a weaker Japanese yen. However, Japan’s population decrease, lagging productivity, and lack of competitiveness also contribute to its relative weakness.
Japan’s economic ascent from the ashes of World War II to become the world’s second-largest economy behind the US was long hailed as an economic miracle. That continued until the 1970s and 1980s. The economy has, however, mostly remained in a state of stagnation for the past 30 years from the start of the financial bubble collapse in 1990, growing only little at periods. Solid productivity from small and medium-sized firms drives the economies of Germany and Japan.
The population of the island nation, which has a low birth rate, has been declining and growing older for years, while Germany’s population has increased to around 85 million due to immigration.
The difference in nominal GDP between developed and emerging countries is closing, with India predicted to surpass Japan in the coming years.
Japan’s slow growth is mostly due to stagnating salaries, which have made households hesitant to make purchases. Simultaneously, companies have made significant investments in economies with rapid growth abroad rather than in the ageing and contracting domestic market.