Germany Overtakes Japan to Become World’s 3rd-Largest Economy

Japan has lost its position as the world’s third-biggest economy. Germany has reached the third spot.

Japan has slipped to the world’s fourth-largest economy, yielding its position to Germany. The shift is attributed to a significant fall in the value of the Yen, as revealed by official data released on Thursday.
Japan’s gross domestic product (GDP) fell an annualised 0.4% in the October-December period after a 3.3% slump in the previous quarter, government data showed on Thursday, confounding market forecasts for a 1.4% increase. Yen, which depreciated over 18% against the Dollar in 2022 and 2023, including a 7% drop last year, played an important role in the country’s decline.
While many analysts still expect the Bank of Japan to phase out its massive monetary stimulus this year, the weak data may cast doubt on its forecast that rising wages will underpin consumption and keep inflation durably around its 2% target.

“Two consecutive declines in GDP and three consecutive declines in domestic demand are bad news, even if revisions may change the final numbers at the margin,” said Stephan Angrick, senior economist at Moody’s Analytics.

Japan Economy Minister Yoshitaka Shindo stressed the need to achieve solid wage growth to underpin consumption, which he described as “lacking momentum” due to rising prices.