Japan’s economy drops to fourth largest in world as recession hits

15 February 2024, 09:34

A Sushi chef
Japanese economy shrinks to world’s fourth largest. Picture: PA

Latest figures show the country’s economy shrank by 0.4% between October and December.

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 (dross domestic product) released on Thursday, 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 Economy
Commuters walk over a bridge during a rush hour at Shinagawa station in Tokyo (AP Photo/Eugene Hoshiko)

Japan’s nominal GDP totalled 4.2 trillion US dollars (£3,35 trillion) last year, while Germany’s was 4.4 trillion dollars (£3.51 trillion).

A weaker 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 decline in its population and lagging productivity and competitiveness, economists say.

Real gross domestic product is a measure of the value of a nation’s products and services.

The annual rate measures what would have happened if the quarterly rate lasted a year.

Japan was historically touted as “an economic miracle,” rising from the ashes of the Second World War to become the second largest economy after the US.

It kept that going through the 1970s and 1980s.

But for most of the past 30 years the economy has grown only moderately at times, mainly remaining in the doldrums after the collapse of its financial bubble began in 1990.

Both the Japanese and German economies are powered by strong small and medium-size businesses with solid productivity.

As an island nation with relatively few foreign residents, Japan’s population has been shrinking and aging for years, while Germany’s has grown to nearly 85 million, as immigration helped to make up for a low birth rate.

The latest data reflect the realities of a weakening Japan and will likely result in Japan’s commanding a lesser presence in the world, said Tetsuji Okazaki, professor of economics at the University of Tokyo.

The US remains the world’s largest economy by far, with GDP at 27.94 trillion dollars (£22.27 trillion) in 2023, while China’s was 17.5 trillion dollars (£13.95 trillion). India’s is about 3.7 trillion dollars (£2.95 trillion) but growing at a sizzling rate of around 7%.

By Press Association

Latest World News

See more Latest World News

Several hundred students and pro-Palestinian supporters rally at Yale University campus

Pro-Palestinian protests sweep US college campuses after arrests at Columbia

Malaysia Helicopter Crash

Two Malaysian military helicopters collide and crash, killing 10 people on board

North Korea

North Korean leader leads rocket drills that simulate nuclear counterattack

Rebel Wilson claims a British royal invited her to a drug-fuelled orgy in her upcoming memoir.

Rebel Wilson claims member of the Royal family 'invited her to drug-fuelled orgy' in upcoming bombshell memoir

Donald Trump accused of orchestrating 'criminal scheme to corrupt 2016 election' on first day of hush money trial

Donald Trump accused of orchestrating 'criminal scheme to corrupt 2016 election' on first day of hush money trial

Volodymyr Zelensky

Biden will send Ukraine weapons once Senate approves aid package, says Zelensky

Trump Hush Money

Trump tried to ‘corrupt’ 2016 election, prosecution alleges

Aharon Haliva

Israeli military intelligence chief resigns over failure to prevent Hamas attack

Trump Hush Money

Trump’s £140m bond settled with cash promise

Trump Hush Money

Trump tried to ‘corrupt’ 2016 election, prosecution alleges

China Floods

Heavy rainstorms kill four people in southern China

Pakistan Iran

Iranian and Pakistani leaders vow to boost trade

Donald Trump has called for people to protest outside court

Donald Trump calls for 'America-loving' protesters to gather outside court as hush money trial begins

Milan is banning takeaway food and drink after midnight

Milan to ban pizza and ice cream after midnight in crackdown on late-night reveller chaos

Anthony Albanese

Australian judge bans X from sharing video of bishop being stabbed in church

Trump Hush Money

Trump set to return to court for opening statements in historic hush money trial