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| Japan's GDP declines due to the Yen. Image of a corner of Tokyo, Japan. (Source: AFP) |
According to IMF calculations, Germany's nominal GDP will reach $4.43 trillion this year. Meanwhile, Japan's figure is only $4.23 trillion. This will put Germany behind only the US and China in terms of economic size.
The IMF also forecasts that Germany's average GDP is 52,824 USD, and Japan's is 33,950 USD.
Part of the reason for Germany's projected GDP growth is the weak yen, which causes Japan's GDP to decline when converted into dollars.
The Japanese currency is now approaching 160 yen to the euro. The last time the exchange rate was at this level was in August 2008.
The yen has weakened due to the interest rate differential between Japan and the West. While the US and Europe have raised interest rates aggressively to combat inflation, Japan has maintained negative interest rates. This has caused investors to sell the currency and switch to other channels with higher returns.
Still, the IMF forecasts Japan’s economy to grow 2% this year, helped by a surge in domestic tourism and a rebound in auto exports. The auto industry has been hit by supply chain issues.
"It is true that Japan's growth potential has declined. But we will regain past growth momentum through upcoming measures," said Japanese Economy Minister Yasutoshi Nishimura.
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