Japan Losses The Crown Of World’s Third-largest Economy

Japan Economy

Germany now has the third-largest economy in the world, surpassing Japan, as the Asian superpower unexpectedly entered a recession.

Japan, which was once the second-biggest economy in the world, announced two quarters of contraction on Thursday: the third quarter’s revised contraction of 3.3% was followed by the fourth quarter’s contraction of 0.4% on an annualized basis. A Reuters poll of economists showed that the fourth quarter GDP significantly undershot expectations of 1.4% growth.

Two quarters of contraction in a row is the general definition of a recession.

GDP decreased by 0.1% on a quarter-over-quarter basis, while a 0.3% increase was predicted by the Reuters survey.

Japan’s nominal GDP increased 5.7% overall in 2023 compared to 2023, totaling 591.48 trillion yen, or $4.2 trillion based on the average exchange rate for 2023. In contrast, Germany’s nominal GDP increased by 6.3% to reach 4.12 trillion euros, or $4.46 trillion using the average exchange rate from the previous year.

The value of output is measured in current dollars using nominal GDP, which does not account for inflation.

The benchmark Nikkei 225 increased 0.65% in response to the most recent GDP report, briefly crossing 38,000 in the morning session as investors interpreted the weak economic data as a hint that the Bank of Japan might postpone ending the nation’s long-standing negative interest rate policy.
As of 1:55 p.m. Tokyo time, the yen was trading at 150.2 against the dollar, continuing its recent trend of trading close to 150.

According to a note published on February 15, Charu Chanana, head of FX strategy at Saxo Markets, “this dire growth picture makes it even more difficult for the BOJ to tighten policy.”

The third-quarter GDP decline, according to a previous note from Chanana, “weakens the conviction around whether inflation is really driven by a virtuous cycle of increased real income and spending.”

Top 5 Economies Now

Rank & CountryGDP (USD billion)GDP Per Capita (USD thousand)
#1 United States Of America (U.S.A)27,97483.06
#2 China18,56613.16
#3 Germany4,73056.04
#4 Japan4,29134.55
#5 India4,1122.85

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