Germany has overtaken Japan as the world’s third-largest economy, with Japan’s nominal GDP standing at $4.2 trillion compared to Germany’s $4.5 trillion, Deutsche Welle reports.
Despite an overall growth of 1.9% last year, Japan has officially entered a technical recession after experiencing two consecutive quarters of contraction. The yen’s depreciation against the dollar has impacted Japan’s economy, while the euro in Germany has remained relatively stable. Both nations face similar challenges such as labor shortages, falling birthrates, and aging populations, but Japan’s situation is more acute.
The weak economic data from Japan raises doubts about the Bank of Japan’s forecast and its plans to phase out stimulus measures. While some analysts believe Japan’s tight labor market and corporate spending could support exiting ultra-loose monetary policies, sluggish growth is anticipated due to negative household savings rates.
Meanwhile, India is projected to surpass both Japan and Germany in the near future with its younger population and higher growth rates.
