Japan Loses Crown as World’s Third-Biggest Economy

By Staff, Agencies

Japan is no longer the world’s third largest economy after unexpectedly slipping into recession at the end of last year, according to official figures released on Thursday. Germany has now moved into third place in terms of nominal GDP.

GDP shrank by an annualized 0.4% in the fourth quarter of last year, following a 3.3% slump in the previous quarter. This confounded market forecasts of a 1.4% increase over the final three months of the year. A technical recession is broadly defined as two consecutive quarters of contraction.

During the fourth quarter, private consumption fell by an annualized 0.9%, and corporate investment dropped 0.3%. Exports rose 11%, while imports increased 7.0%.

“Service consumption has hit a lull, goods prices continue to increase, and because of the warm winter, clothing consumption was lackluster from October onward,” a government official said.

Japanese households have been struggling with a rising cost of living and declining real wages that led to a 0.2% drop in private consumption, which accounts for more than half of economic activity in the country.

In dollar terms, Japan’s GDP stood at $4.2 trillion at the end of 2023, versus $4.5 trillion for Germany.