KUALA LUMPUR – Despite contracting 0.3% in 2023, Germany overtook Japan to be the third world’s biggest economy with a gross domestic product of US$4.5 trillion (RM21.5 trillion).
Official data also showed Japan netted 1.9% growth, or US$4.2 trillion, last year.
However, mid last year, India was projected to become the world’s second-largest economy by 2075, beating the United States, Japan, and Germany, while China remained in the top spot.
Japan’s slip to fourth place is partly due to the yen, which slumped by almost a fifth in 2022 and around 7% in 2023 against the US dollar.
The Bank of Japan has maintained negative interest rates, unlike other central banks, which have raised borrowing costs to fight inflation.
Japan also faces a fall in population and low birth rates.
Today’s data also showed that Japan’s economy shrank an adjusted 0.1% quarter-on-quarter in the last three months of 2023, missing predictions of 0.2% growth and keeping the country in a recession.
Japan was world number two but was overtaken by China in 2010.
Germany is not without its challenges, as its export-dependent manufacturers have been hit hard by soaring energy prices amid Russia’s invasion of Ukraine. It is also hampered by the European Central Bank raising interest rates as well as shortages of skilled labour. – February 15, 2024