Recession took away the position of third largest economy from Japan, this country took the place

Japan’s economy unexpectedly slipped into recession on Thursday and the country lost its spot as the world’s third-largest economy. Now Germany has got this game. Japan has dropped from the third economy position to the fourth. There was a decline in Japan’s economy in the third quarter of the current financial year. Due to this decline, there are chances of recession in Japan.

What is the cause of recession in Japan?

Weak domestic demand has weighed on Japan’s economy as it contracted unexpectedly for the second consecutive quarter, raising uncertainty about the central bank’s plans to exit its ultra-easy policy sometime this year.

Which country replaced Japan?

Germany is now the third largest economy in the world. Japan’s economy became the world’s fourth-largest in US dollar terms last year as households and businesses cut spending for the third consecutive quarter. The International Monetary Fund (IMF) estimated in October last year that Germany was likely to overtake Japan as the world’s third-largest economy when measured in US dollars. However, changes in the rankings will be announced by the IMF only after both countries publish the final versions of their economic growth data. It began publishing data comparing economies in 1980.

japan’s gdp

Japan’s gross domestic product (GDP) is expected to decline by a larger-than-expected 0.4 percent in the last three months of 2023 compared to a year earlier. This came after the country’s economy contracted by 3.3 percent in the previous quarter.

The way forward?

The weak economic data could cast doubt on the Bank of Japan’s (BOJ) forecast that rising wages will dampen consumption, and that it would be wise to phase out its massive monetary stimulus. A Reuters report quoted Takuji Aida, Credit’s chief economist, as saying the economy may shrink again in the January-March quarter due to slowing global growth, weak domestic demand and the impact of the New Year earthquake in western Japan. . The BOJ may be forced to sharply reduce its rosy GDP forecasts for 2023 and 2024.