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Japan's financial growing slows as Germany outperforms in rankings
(MENAFN) Official data released on Thursday revealed that the Japanese economy experienced a modest growth of 1.9 percent in the past year. However, despite this growth, Germany has overtaken Japan to claim the position of the world's third-largest economy. This shift can be attributed largely to the significant depreciation of the yen against other currencies, particularly the dollar.
In 2023, Japan's nominal GDP reached USD4.2 trillion, trailing behind Germany's USD4.5 trillion, as reported in recent figures. The decline in the value of the yen, dropping by more than 18 percent over the span of 2022 and 2023, with a 7 percent decrease occurring solely in the last year, played a pivotal role in this shift. Notably, the Bank of Japan's decision to maintain negative interest rates differed from the policies of other major central banks, contributing to the currency's depreciation.
Both the Japanese and German economies heavily rely on exports. However, Japan faces more significant challenges, such as a severe labor shortage and a declining population, compared to Germany. These factors have impacted Japan's economic performance, contributing to its displacement from its former ranking.
Looking ahead, India, with its youthful demographic and robust growth rates, is poised to surpass both Japan and Germany to claim the position of the world's third-largest economy, following only the United States and China. Forecasts suggest this shift could occur later in the current decade.
Despite earlier growth, recent data from the Cabinet indicates a contraction of 0.1 percent in the Japanese economy during the final three months of the previous year. This contraction marks the second consecutive quarterly decline in production, following a 0.8 percent contraction reported from July to September. These figures contrast with expectations of a 0.2 percent growth, signaling potential challenges ahead for Japan's economic trajectory.
In 2023, Japan's nominal GDP reached USD4.2 trillion, trailing behind Germany's USD4.5 trillion, as reported in recent figures. The decline in the value of the yen, dropping by more than 18 percent over the span of 2022 and 2023, with a 7 percent decrease occurring solely in the last year, played a pivotal role in this shift. Notably, the Bank of Japan's decision to maintain negative interest rates differed from the policies of other major central banks, contributing to the currency's depreciation.
Both the Japanese and German economies heavily rely on exports. However, Japan faces more significant challenges, such as a severe labor shortage and a declining population, compared to Germany. These factors have impacted Japan's economic performance, contributing to its displacement from its former ranking.
Looking ahead, India, with its youthful demographic and robust growth rates, is poised to surpass both Japan and Germany to claim the position of the world's third-largest economy, following only the United States and China. Forecasts suggest this shift could occur later in the current decade.
Despite earlier growth, recent data from the Cabinet indicates a contraction of 0.1 percent in the Japanese economy during the final three months of the previous year. This contraction marks the second consecutive quarterly decline in production, following a 0.8 percent contraction reported from July to September. These figures contrast with expectations of a 0.2 percent growth, signaling potential challenges ahead for Japan's economic trajectory.
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