Japan slips below Germany in global economic rankings, securing 4th place

(MENAFN) Official data released Thursday revealed that Japan, once anticipated to ascend as the world's leading economy, slipped below Germany in rankings last year, securing fourth place.

Japan's nominal gross domestic product (GDP) in dollar terms for 2023 stood at USD4.2 trillion, reflecting a 1.9 percent growth. In comparison, Germany's GDP reached USD4.5 trillion, as reported in figures released by Germany last month.

The shift in rankings primarily stems from the substantial depreciation of the yen against the dollar. The yen plummeted by nearly one-fifth during 2022 and 2023, with an additional seven percent decline recorded last year against the US currency.

The Bank of Japan's decision to uphold negative interest rates, unlike other major central banks that raised borrowing costs to combat rising inflation, contributed to this trend.

Both Japan and Germany heavily rely on exports, but Germany's manufacturing sector faced significant challenges due to surging energy prices and Russia's invasion of Ukraine.

In addition, the European Central Bank's decision to raise interest rates in the Eurozone, coupled with uncertainties surrounding Germany's budget and chronic shortages of skilled labor, further hampered Europe's largest economy. Despite Japan's slip in rankings, India is poised to surpass both Japan and Germany in the coming decade.

In January, German Finance Minister Christian Lindner rebuffed accusations labeling his country as the "sick man" of Europe.

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