Japan's Economic Shift: Germany Surpasses as Third-Largest Global Economy in 2023

Japan has relinquished its position as the third-largest global economy. In 2023, its gross domestic product (GDP) amounted to ¥591.48 trillion (US$4.21 trillion). Germany has surpassed Japan in economic size, with its GDP reaching 4.46 trillion dollars in the same year. The contraction of Japan's economy persisted throughout the third and fourth quarters of the previous year, as government data revealed a slowdown.

The economic downturn, evident in a 0.4 shrinkage from October to December, was primarily attributed to weakened spending. Preliminary data from the government indicates a 0.1% decline in Japan's real GDP compared to the preceding quarter. The Cabinet Office reported a 0.8% decrease in the third quarter of 2023 compared to the second quarter.

Notably, private consumption, constituting over half of Japan's GDP, experienced a 0.2% decline for the ninth consecutive month in the October-December period. Business investment also contracted by 0.1%. While imports, adversely affecting GDP, rose by 1.7%, exports increased by 2.6%. Thursday's data disclosed a 1.9% growth in Japan's GDP for 2023, representing a 5.7% increase in nominal terms.