Germany Surpasses Japan as Third-Biggest Economy Amid Currency Fluctuations
Germany has overtaken Japan as the world’s third-largest economy, official data revealed, marking a significant shift in global economic rankings. Japan’s nominal GDP in dollar terms fell below that of Germany last year, primarily due to the sharp decline in the value of the yen against the dollar.
Despite Japan’s 1.9 percent economic growth in 2023, its nominal GDP stood at $4.2 trillion, compared to Germany’s $4.5 trillion. The weakening yen, which depreciated by almost a fifth against the dollar over the past two years, contributed to Japan’s lower GDP figures.
While Germany’s economy contracted by 0.3 percent in 2023, factors such as rising energy prices, labor shortages, and uncertainty over budget and skilled labor availability have impacted its economic performance. However, Germany’s export-oriented manufacturing sector has remained resilient, aided by the eurozone’s interest rate policies.
Japan’s economic challenges include population decline, low birth rates, and workforce shortages. Despite export competitiveness due to the weak yen, Japan faces hurdles in sustaining economic growth. Its economy shrank by 0.1 percent in the last quarter of 2023, leading to technical recession in the second half of the year.
Analysts attribute Germany’s relatively steady economic growth to proactive government policies supporting business operations and creating a favorable environment for companies. In contrast, Japan’s economic reforms have been limited, contributing to its stagnation and loss of global economic ranking.
The shift in economic rankings underscores the need for Japan to address structural issues and implement reforms to boost growth potential. Additionally, projections indicate that India is poised to surpass both Japan and Germany in terms of economic output in the coming years, highlighting the evolving dynamics of the global economy.
