JAPAN’S economy is now the world’s fourth-largest after it contracted in the last quarter of 2023 and fell behind Germany. The Government reported the economy shrank at an annual rate of 0.4% in October to December, according to Cabinet Office data on real GDP, though it grew 1.9% for all of 2023. It contracted 2.9% in July-September. Two straight quarters of contraction are considered an indicator an economy is in a technical recession. Japan’s economy was the second largest until 2010, when it was overtaken by China’s.

 

Japan’s nominal GDP totalled USD 4.2 trillion last year, while Germany’s was USD 4.4 trillion, or USD 4.5 trillion, depending on the currency conversion. A w eaker Japanese yen was a key factor in the drop to fourth place, since comparisons of nominal GDP are in dollar terms. But Japan’s relative weakness also reflects a declineinitspopulationand lagging productivity and competitiveness, economists say. Real grossdomesticproduct is a measure of the valueofa nation’sproductsand services. The annual rate measures what would have happened if the quarterly rate lasted a year.